TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, July 14, 2010

Kyl-Lincoln Estate Tax Fix: $5m Exemption, 35% Rate, Election for Decedents Dying in 2010

Senators Jon Kyl (R-AZ) and Blanche Lincoln (D-AR) issued a press release today on their estate tax reform proposal: a 35% rate; a $5 million exemption phased in over ten years and indexed for inflation; and an elction for estates of decedents dying in 2010 (either to retain this year's 0% rate with carryover basis or to be taxed under the Kyl-Lincoln act).

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I'm not sure I understand the what circumstances would one want to elect the new plan over a 0% rate?

Posted by: David Stokley | Jul 14, 2010 11:56:24 AM

David, it would appear the 0% option precludes step-up in basis in favor of "carryover" basis.

Posted by: Carl A. Friedrich | Jul 15, 2010 6:35:36 AM

There will be no fix, Congress will do what it does best-nothing-and look to see the Bush tax cuts expire-except for pensions of course-PPA 2006.

Posted by: Nick Paleveda MBA J.D. LL.M | Jul 15, 2010 8:01:15 AM

What does it mean to say that the $5 million exemption will be phased in over 10 years ? What would be the exemption level next year, for instance?

Posted by: jay miller | Jul 15, 2010 2:57:53 PM

The motion gives no details about phase in. Hopefully the 2011 exemption would be $3.5 m, but 10 years would be a long phase in just to get to $5m. Hopefully the exemption wouldn't start with $1m. We've seen that movie.

Posted by: p.m. lowry | Jul 16, 2010 4:50:09 AM