stepped up basis

[ELNbluemax2]

If President Bush's tax plan, regarding the Federal Estate Tax (death tax) is voted in, what happens to the "stepped-up basis" on inherited property?? They have been awfully q
quiet about it.
Ohio

Good question!

Under the current law, if no estate tax return is required, the basis of the property is the appraised value at the date of death. In otherwords, the basis adjustment at death does not depend on an estate tax being paid.

That does not mean that Congress will not change that in the future, but to do so would be to hurt the same people Bush is trying to help by getting rid of the estate tax.

The following is from the House's Committee Report [written in late February]. I don't have the Senate Report or the COnference Committee Report. However, I'd believe that the same conceptual regime would be followed:

COM-RPT-PROP-LEG, [HRRepNo 106-651], House Ways and Means Committee Report on the Death Tax Elimination Bill of 2000, HR 8. PART 01 OF 03.
The estate, gift, and generation-skipping transfer taxes are repealed, and a carryover basis regime takes effect, for decedents dying and gifts and generation-skipping transfers made after December 31, 2009.
Replace unified credit with unified exemption .--The bill replaces the unified credit with a unified exemption for decedents dying and gifts and generation-skipping transfers made after December 31, 2000.
Carryover basis .--After repeal, the basis of assets received from a decedent generally will be the basis of the decedent (i.e., carryover basis). However, $1.3 million of
transfers from decedents to any beneficiaries will receive a step up in basis. An additional $3 million of transfers from decedents to surviving spouses also will receive a step up in basis. For these purposes, the executor will elect which assets receive a step up in basis.

Modify generation-skipping transfer tax rules
The bill deems there to have been generation-skipping transfer tax exemption allocated to transfers made during life that are “indirect skips,” which are transfers to
generation-skipping transfer trusts that are not direct skips. The bill also allows the retroactive allocation of generation-skipping transfer tax exemption when there is an
unnatural order of death. Moreover, the bill allows a trust holding property with an inclusion ratio greater than zero to be severed at any time in a “qualified severance.”
In addition, the valuation rules are modified such that, for timely and automatic allocations of generation-skipping transfer tax exemption, the value of the property
for purposes of determining the inclusion ratio is its finally determined gift tax value or estate tax value depending on the circumstances of the transfer. The bill also authorizes and directs the Treasury Secretary to grant extensions of time to make the election to allocate generation-skipping transfer tax exemption and to grant
exceptions to the time requirement.