Monday, May 10, 2010
Hani Sarji, author of on the Future of the Federal Estate Tax blog, has posted an interesting analysis of a recent Bloomberg article. The article at issue, Death Tax Lives in Estate Repeal for Heir Who Must Sell Assets, Bloomberg, May 7, 2010, correctly points out the uncertainty surrounding the estate tax.
The article, however, creates confusion by using a misleading title and failing to fully distinguish between the estate tax and the income tax:
[T]he full title is misleading: “Death Tax Lives in Estate Repeal for Heir Who Must Sell Assets.” If “death tax” means the estate tax, then this statement is not true. The federal estate tax is repealed in 2010. If, however, “death tax” means a tax somehow related to a person’s death, the term might make sense, but it requires a number of assumptions. In 2010, heirs who must sell assets will realize a capital gains tax, if they have built-in gain, and if the executor does not allocate any of the $1.3 million basis increase (or the additional $3 million for qualified transfers to spouses). This tax would be an income tax.Hani Sarji, Bloomberg.com article captures the confusion caused by the repeal of the estate tax, Future of the Federal Estate Tax, May 7, 2010.