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Julie Garber

2013 Estate Tax and Fiscal Cliff Update

By December 31, 2012

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Breaking news - it appears that a tentative deal has been reached to avert the fiscal cliff. Here is the latest from abcnews.go.com in a piece titled "'Fiscal Cliff': Biden, McConnell Close In on Last-Minute Deal":

"Congressional and White House negotiators are closing in on a deal to avert across-the-board tax hikes and spending cuts that take effect at midnight, as the nation teeters on the edge of the so-called fiscal cliff.

An emerging tentative agreement would extend current tax rates for households making $450,000 or less; extend the estate tax at its current level of 35 percent for estates larger than $5 million; and prevent the Alternative Minimum Tax from hammering millions of middle-class workers, sources said.

The deal would also extend unemployment benefits set to expire Tuesday and avert a steep cut to Medicare payments for doctors."

No word on where the levels for the lifetime gift tax exemption and rate and generation skipping transfer tax exemption and rate will end up.

Of course, as stated in the abcnews.go.com piece referenced above, "Even if a deal is reached between Biden and McConnell, members in both chambers would still need to review it and vote on it later today. Passage is far from guaranteed."

Meanwhille, CNBC TV is now reporting that the estate tax rate will be set at 40 percent on estates valued at $5 million or more, not the current 35 percent rate.

President Obama just finished speaking and said that while a deal is in sight, it is not done yet. Close, oh so close...

Stay tuned for updates...

Updates on December 31, 2012

3:30 p.m. EST - While it appears that the tax portion is a done deal, spending cuts are the sticking point. In addition, it is being reported that even if the Senate is able to get something passed this evening, there will not be enough time for the House to vote until after midnight.

4:00 p.m. EST - The House will not be voting on anything before midnight, so we will be going over the fiscal cliff.

4:25 p.m. EST - House Republicans will convene for a conference at 5:00 p.m. but will not discuss the details of the fiscal cliff negotiations going on in the Senate.  The House will then wrap up at 6:30 p.m. this evening.  Apparently they would prefer to go over the fiscal cliff and take a look at whatever may come out of the Senate this evening in the light of day of the new year.

6:35 p.m. EST - Republican Senators emerged from a closed-door meeting and are hopeful that a vote on the McConnell-Biden deal will take place this evening.  Regardless, the House is not set to reconvene until noon on New Year's Day.  Meanwhile, some Democrats are complaining that the estate tax provisions are too generous since it appears that the deal includes a $5 million+ exemption that will be indexed for inflation in future years.

8:15 p.m. EST - Still no deal and therefore no vote, getting ready to leave for downtown Key West for the New Year's Eve celebration - Meet the star of Key West's 'drag queen drop'. See you next year at the bottom of the cliff.

Update on January 1, 2013

10:25 a.m. EST - Here we are at the bottom of the cliff, but this morning at 1:39 a.m. EST the Senate managed to pass the American Taxpayer Relief Act. Please refer to 2013 Estate Tax and Fiscal Cliff Update - Senate Passes American Taxpayer Relief Act, House Balks But Passes it Too for the latest updates.

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