Yes, there was no excuse for this, although the healthcare debate will likely be identified as the culprit. Since we know that wealthy people will continue to pass in the new year, and their estates will immediately be in estate tax limbo, it is very probable that any provisions establishing the right for retroactive legislation of this type will be tested in court. This situation will provide an extra windfall in 2010 for the estate segment of the legal provision.

If the estate tax goes away for any length of time whatsoever, there will also be issues in proper identification of basis for the carryover basis rules that accompany the end of the estate tax. Some beneficiaries will face capital gains if they inherit low basis assets, and the details of the 1.3mm allowed basis adjustment will have to be fully developed before beneficiaries or estates begin to sell assets.

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