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Death Tax starts on January 1

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
Just a reminder for those doing investment and tax planning, President Obama is set to allow the Death Tax to go from 0% to 55% on January 1.

As property values of apartments in NYC, LA, Boston and Chicago, for modest middle class units, can easily exceed $1,000,000 and as small businesses can accumulate values of $1M or more in simple inventory due to inflation and expansion, it became apparent to reasonable people that taxes could bankrupt families and force the sales of their homes and destroy family farms and family businesses.

Prior to the estate tax reduction, estates were taxed at rates beginning at 37 percent and going as high as 55 percent. Generally, the estate tax only applied to assets exceeding $1 million.

Included in President Bush's tax cuts, however, was a provision to phase out the estate tax rate over the next few years. For families with large real estate holdings such as farms that have been held for generations or small businesses, this stroke of good luck will ensure that assets are passed onto posterity without Uncle Sam taking a majority of the bounty. This would be accomplished in two ways: 1.) by raising the amount exempt from the estate tax rate, and 2.) lowering the estate tax rate itself.

According to the IRS literature, an estate tax filing need only be made if the value of an estate exceeds the following amounts:

2005: First $1,500,000 in assets
2006-2008: First $2,000,000 in assets
2009: First $3,500,000 in assets

In addition, the maximum estate tax rate applied to the amounts in excess of these figures are as follows:

2005: 47 percent
2006: 46 percent
2007- 2009: 45 percent

In 2010, the estate tax rate drops to zero percent; if you die in that year, your heirs would not pay taxes, even if you passed on $20 billion!

Congress ensured that the law sunsets in 2011. That is, on January 1st, 2011, the estate tax rate will return to its pre-Bush levels. Practically speaking, this means the difference between dying on December 31, 2010 and January 1, 2011 can mean 55 percent of your estate if you are person of means!

Now didn't President Obama suggest that he would not tax the middle class? I know middle class farmers who struggle to pay their grocery bills but have large tracts of land. Guess they will soon be losing their farms.
 
D

darroll

Guest
The US sounds more like the old Cuba every day.
Vote for a new guy, then the dems can have someone to blame.
 

jpr62902

Jeanclaude Spam Banhammer
SUPER Site Supporter
It's been almost 20 years since I took Estate and Gift Taxation. Back then, the unified credit was $600,000 with an unlimited marital deduction.

In other words, you could bequeath an infinite amount to your surviving spouse. All other bequests weren't taxed until they exceeded $600,000. What are the credits and deductions in 2011?
 

EastTexFrank

Well-known member
GOLD Site Supporter
Damn it. My 92-year old mother-in-law just won't die. The spiteful old bugger will outlast us all. :yum::yum:

Honestly, what ever happens will happen. There's no sense in worrying about this. If the old folks haven't taken steps to secure their holdings all that we, the next generation, can do is live with the consequences. It's a bitch though giving that much money to Uncle Sam.
 

Av8r3400

Gone Flyin'
No one should ever need to pay the death tax. A little bit of estate planning will negate the whole thing.

Still doesn't mean it's right, though...
 

Dargo

Like a bad penny...
GOLD Site Supporter
No one should ever need to pay the death tax. A little bit of estate planning will negate the whole thing.

Still doesn't mean it's right, though...

True....but estate planning costs money. There is still a loss. My HUGE issue is that all of the estate being passed down has already been taxed once. Any sort of inheritance tax taxes assets that were already taxed as they were accumulated!

For the longest time the threshold was $600k for single people and $1.2 million for a couple. If you wonder if it really affects people, look up why the stadium where the Dolphins play is no longer called "Joe Robbie Stadium". It might take a little digging, but the family was forced to sell everything due to estate taxes. My sister was one of the attorneys who worked for the family in a futile effort to retain some of what the family worked so hard to put together over their lives. Instead, being taxed twice on the same assets did them in. The same nearly happened to Sammy Davis Jr.'s wife. The NAACP got involved and somehow she came out okay.

I have no rich relatives, so it will never affect anything I may ever inherit. Unfortunately, this crap double taxation legislation is going to cost me quite a bit to assure my kids are able to keep all I've worked for my entire life. Personally, the entire concept makes me angry and bitter towards the government. Also, the written top tax rates are pure BS. If you factor in all of the lost deductions that are phased out at different income levels, in certain instances people are already paying well over 50% in taxes. With the impending increases, no incentive is left to continue a business in that situation. Generally, the business owner can just retire and close the business. That hurts, but what about all the people put on the streets because of that business closing. It's estimated that small business in this exact situation employ around 25% of all people right now. If you think unemployment is high now...
 

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
Dargo, two words of advice: GO GALT
 
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