When the Estate Tax is repealed (albiet for one year) in 2010, some heirs will face capital gains tax instead, with complicated and burdensome record keeping necessary. Check out this article at Bankrate.com, from which the chart below was taken...
 |
| Tax cost of selling inherited assets: |
|
| Year of death |
Amount of property exempt from the estate tax |
Basis of inherited property used to calculate capital gains tax |
| 2002 and 2003 |
$1 million |
Full step-up in basis |
| 2004 and 2005 |
$1.5 million |
Full step-up in basis |
| 2006, 2007, 2008 |
$2 million |
Full step-up in basis |
| 2009 |
$3.5 million |
Full step-up in basis |
| 2010 |
Tax repealed |
Carry-over basis, with additional step-up basis of up to $1.3 million for nonspousal heirs; property left to husband or wife allowed additional $3 million step-up (total basis of $4.3 million). |
| 2011 |
$1 million |
Full step-up in basis |
|
