Hey AR...you know I often wondered what Ben Franklin was really thinking about when he wrote the phrase "the only thing certain is death and taxes"in a letter sent to his friend Jean-Baptiste Leroy in 1789. We all know that our day is enviable but have you ever really thought about which one really comes first.? Oh come on.......you know the taxman always cometh first!
But the truth be told folks look at how much of our lives are regimented based on the simple premise of trying to avoid tax liabilities. Just how bad is it? Let's pause to reflect for just a moment. We spend enormous amounts of time and money looking for investments, shelters, tax loopholes, and yes some folks even plan to have their babies just at the end of the year to get that extra tax credit! Shameful you say? Well, just like Sargent Joe Friday from Dragnet, I'm here just to give the facts. Speaking of facts, 20% of all American wait until the last week to file and 5% to 10% wait until April 15th. That when in a rush we ambush our accountants and CPA with the phrase coined from Larry the Cable Guy...'"Just Git-R-Done!"
By the way speaking of death and taxes, were you aware of the new law that has slayed the so-called death tax? Yep, back in June of 2001, President Bush made good on his promise to slash taxes by putting his John Henry to the trillion dollar tax cut package that has become infamously known as the Economic Growth & Tax Relief Reconciliation Act. Of course, that nifty piece of legislation proved to contain the biggest cuts in over 20 years but some of these changes may or may not even go into effect.
One of the biggest and most complicated is the repeal of estate taxes set to go into effect in 2010.
Stay with me folks...the estate tax exemption increases from $675,000 in 2001 to $3.5 million in 2009.
Then in 2010 "poof" its gone! But guess what, it reappears again in 2011 at a $1 million dollar exemption! Why? Get this....In order to meet budgetary restriction a "sunset" provision brings the rule back in force in 2011. Here is the 411.
Under the current law when you die, your assets receive a "step-up in basis." This means that real estate, stocks and other inherited assets are valued at their market price on the day of your death, not the price you originally paid for them.
This will of course change after the estate tax is repealed but it could create a paperwork nightmare for folks who inherit a large amount of appreciated assets because you will need to get your hands on records that will document the original purchase price of the assets. May I suggest that for more information please consult your attorneys, financial planners, Accountants, or CPAs for more information on the tax, probate, trusts, credit-shelters, and other questions related to handling your estate.
But not to worry! I'm certain that President Obama and Congress will soon revisit this issue prior to the end of the year. Word out is that the Prez is not in favor of a full repeal but looks to keep the exemption at $3.5 million. I believe that the gift tax will also stay. Yeah, I know what you've thinking....All this crap is really taxing your patience.
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