2010 TRA Section 301(a): “In general.—Each provision of law amended by subtitle A or E of title V of the Economic Growth and Tax Relief Reconciliation Act of 2001 is amended to read as such provision would read if such subtitle had never been enacted. “The repeal of the estate tax (i.e., subtitle A) is repealed, so that the estate tax applies to the estates of a person who died in 2010. The carryover basis rules (which were in subtitle E) no practitioner wanted to have to deal with are repealed as if they had never been enacted. The only exception will be for those estates for which the executor elects to apply the carryover basis rules, instead of the estate tax, based on the optional provision the 2010 TRA provides for (see below). “Carryover basis” as explained in considerable detail in Chapter 4 is a tax system in which an estate is not subjected to the federal estate tax, but in exchange loses the ability to increase (step up, but more technically, adjust) the tax basis (cost, investment) of appreciated assets held at death to their fair value. The complexity of these rules makes tax experts shudder. If you’re not dealing with an estate of someone who died in 2010 (and generally one that is in excess of $5 million) you may never have to understand or deal with these carryover basis rules.
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