“Ask Your Attorney” Column

About The 2010 Tax Relief Act

Dear Counselor: I’ve been holding my breath waiting to see what our representatives in Congress were going to do about the Bush tax cuts due to expire the end of this year. Now I see on TV that they passed something, and President Obama signed it into law two weeks ago. Is it good or bad news for us taxpayers?

Dear Client: The “Tax Relief, Unemployment Insurance
Reauthorization and Job Creation Act of 2010″ (what a mouthful)
was signed into law on December 17, 2010, by President Obama.
The Act provides at least some temporary guidance to taxpayers,
after nearly a year of uncertainty created by the inaction of Congress.
Unfortunately, the Act only provides for a two year extension of
the “Bush tax cuts”, ending on December 31, 2012. Thus, we will
have to wait for some additional, hopefully more permanent, tax relief,
in the coming months. The good news is that under the Act,
individual income tax rates will remain the same, and not go up
markedly higher (which is what would have happened
without the Act being passed). Another important aspect
of the new law is that far reaching changes were made to
federal estate and gift tax laws. Beginning on January 1, 2011,
each person will have one exemption for gift and estate taxes of
$5 million, as well as a $5 million exemption from generation-skipping
transfer taxes, and married couples will have a total exemption
of $10 million. This will mean that no estate or gift tax will be
payable by anyone but the most wealthy Americans (assuming
the law doesn’t expire after two years). The 2010 Tax Relief Act
has an impact on nearly every American taxpayer, both individuals
and businesses. We’ve prepared a summary of the important features
of this new tax legislation, and you can find it on our website
[www.wisclaw.com] – or e-mail me and I will forward a copy to you.
John L. Maier, Jr.
[email protected]