After 2010, estate and generation-skipping taxes are fully repealed. There is then a modified carryover basis plan. The basis step-up will be allocable to specific assets within the estate. The basis step up exclusions include property acquired within 3 years of death, property that is income in respect of decedent, stock of a personal holding company, stock of a domestic international sales corporation and stock of a foreign investment company. To assist the Service in tracking the basis of assets, there are extensive reporting requirements for estate executors.
Several changes impact special business exemptions.
In 2004, the qualified family-owned business deduction would be repealed. Installment payment rules for estate taxes would be retained. The previous requirements for a specific geographic location were deemed too complex. Improvements Generation skipping tax is generally applicable when there is a direct skip, a taxable termination or taxable distribution to a grandchild. The estate may defer payment of principal and pay only interest for the first five years, followed by up to 10 annual installments of principal and interest.