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Tax Relief, Unemployment Insurance Re-Authorization, Job Creation Act of 2010

Sometime around midnight the US House of Representatives passed a tax bill which the Senate had passed earlier in the week.  This is a very quick overview of what the Act does for US tax law for the next two years. It is only a two-year patch.

Income Tax Rates: Extension of 2001 Income Tax Rates through 2012. 

Capital Gains: Extension of the fifteen percent capital gain rate through 2012.

Qualified Dividends: Extension of the fifteen percent income tax rate through 2012.

Alternative Minimum TaxExemptions: Extension of 2009 exemptions through 2011.

Investment Incentives: One hundred percent first year write-off for broad classes of capital assets used in a trade or business. 

Payroll Tax Reduction: Two percentage point decrease in employee social security tax withholding.

Estate, Gift, and Generation Skipping Transfer TaxRates: Decrease to thirty-five percent for gifts made and decedents dying in 2010, 2011, and 2012.

Gift, Estate, and Generation Skipping Transfer Tax Exemptions: Increase to five million dollars for gifts made and decedents dying in 2011 and 2012. One million dollar gift tax exemption retained for gifts made in 2010.

Date of Death Basis Adjustment: Carryover basis repealed for decedents dying after 2010.  Full basis “bump/step-up” to date of death value for decedents dying after 2009.

Special Election for Decedents Dying in 2010: Election for either (1) no estate tax with limited basis “bump/step-up” or (2) estate taxation at thirty-five percent rate and $5 million exemption.