http://finance.yahoo.com/news/Congress-and-EstateTax-wallstreet-1603551094.html?x=0
Tom Herman, On Sunday August 1, 2010, 1:03 am EDT
Q: Who in Congress are the key leadership players on revising the estate tax? Is this a separate issue or part of overall tax reform? Is it possible they will deal with this prior to their August recess?
A: Among the major players are Senate Majority Leader Harry Reid, a Nevada Democrat, and Sen. Max Baucus (D., Mont.), who heads the Senate Finance Committee, which oversees tax legislation.
Others include Sen. Charles Grassley of Iowa, the ranking Republican on the Senate Finance Committee; Sen. Jon Kyl (R., Ariz.); and Sen. Blanche Lincoln (D., Ark.)
The main focus is on the Senate since the House already has approved estate-tax legislation. Among the key players in the House: Speaker Nancy Pelosi, a Democrat from California, and Democratic Rep. Sandy Levin of Michigan, chairman of the powerful Ways and Means Committee. Rep. Dave Camp of Michigan is the ranking Republican on the Ways and Means Committee.
On your question about timing: Nobody knows when Congress will act, or whether this tax will be dealt with as part of some wide-ranging legislation. It's possible that the Senate might reach agreement in coming weeks. But lawmakers might wait to tackle the issue until after the November elections.
Congress might be unable to reach any agreement this year, some analysts note. If Congress takes no action, the estate tax, which expired at the end of last year, will return next year with a basic exemption of $1 million and a top rate of 55% on the largest estates. (Transfers between spouses typically are tax-free.) For 2009, the basic exemption was $3.5 million, and the top rate was 45%.
Here's a recent development that bears watching: Sens. Kyl and Lincoln introduced a bill that would set the top estate-tax rate permanently at 35%. It also would set the exemption amount at $5 million, phased in over 10 years and indexed for inflation.
And it would restore what's known as "stepped-up basis" for inherited assets that have gone up in value. Essentially, it means stocks, bonds and other assets you inherit typically would be valued on the date of death of your benefactor, instead of what that person originally paid for them.
That's important for calculating capital-gains taxes when you eventually sell those assets.
Write to Tom Herman at tom.herman@wsj.com
Here is a link to Senator Kyl's web site on the proposed bill, http://kyl.senate.gov/record.cfm?id=326353
Senator Lincoln's press release is at http://lincoln.senate.gov/newsroom/2010-7-14-1.cfm
H.R. 5297 is at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h5297pcs.txt.pdf
CNN Money recently has an articled, titled "Estate tax in limbo". Read it at http://money.cnn.com/2010/06/18/pf/taxes/estate_tax/index.htm
