ESTATE & GIFT TAXES
The rejuvenated estate tax tops the list of new tax law changes. The exemption for 2011 rises to $5 million, with a 35% flat rate. That is significantly better than the $1 million exemption and 55% maximum rate that would have applied for this year if Congress had not acted.
Heirs also get to use the date-of-date value for assets inherited in 2011. The modified carryover basis rules that estates could elect to use in 2010 don't apply.
The estate tax exemptions are portable, so that when one spouse dies, the unused amount can go to the surviving spouse for use at his or her death.
The special estate tax valuation of real estate is revived as well for 2011. Up to $1,020,000 of realty used for farming or business can get discount valuation.
ENERGY CREDITS
The tax credits for energy saving home improvements is less juicy in 2011. The credit is now just 10%, down from 30%, and the previous $1,500 ceiling falls to $500. There are also caps on many items: No more than $150 can be claimed for furnaces adn water heaters, $200 for windows and $300 for biomass fuel stoves. The credit is no longer allowed for payments financed with state or federal subsidies. Credits claimed in prior years, including 2009 and 2010, will count against the $500. The 30% credit for alternative energy systems, such as solar panels, is not cut back.
Meck CPA Austin
