Estate Planning and Tax Lawyer Blog

There have been recent discussions and rumors that Congress will retroactively impose an estate tax in 2010. The windfall inheritances and distributions among the wealthy are just a few reasons why Congress would go back and enforce an estate tax.

But the constitutionality of this action will surely be litigated upon. Also, there are new capital gain exemptions, up to $1.3 million from the carryover basis rule and $3 million for spouses who inherit.

This "carryover basis" rule says that in determining gains you use what you paid for an asset as your cost basis rather than the market value of the asset at the time of the grantor's death.

This treatment will result in higher capital gains (assuming the asset appreciates in value) and higher income taxes. But applying the exemptions should ease some of this burden.