Section 179 of the federal tax code allows producers to ac- celerate depreciation on new or used machinery or equip- ment purchased in the tax year.
the American Taxpayer Relief Act of 2012 (ATRA), the so-called “fi scal cliff” bill that also preserved the 2001 tax cuts for all but the highest earners. Under ATRA, the exemption stays at a little over
$5 million and the tax above that level rises to 40 percent, but the exemption will be adjusted annually for infl ation. For deaths in 2013, the IRS says it will be $5.25 million. Most Americans, says Childs, will benefi t. “Sta-
tistics show that about 96 percent of Americans have estates smaller” than the current exemption, he says. The bill also preserves the portability that was added in 2010. Childs says, “Any portion of the $5 million that was not used by 1 spouse could be moved to the surviving spouse’s estate, so with the 2 deaths they got the full $10 million exemption if they needed it.”
However, the inheritor will have to fi le an estate tax return when the fi rst spouse dies to qualify. And the bill keeps the stepped-up basis, which
means the inherited assets are adjusted to their value at the date of death instead of remaining at the price paid by the deceased. As Childs points out, “There is land that has been in families for many generations that sometimes is just given to the next generation. When that happens, the recipient gets the same basis as the donor, and that $50 or $100 basis (the original purchase price per acre) gets passed on. But when it goes to probate they get a stepped-up basis, and that has a tremendous income tax impact to future generations.” NCBA Director of Legislative Affairs Kent Bacus says the cattlemen were trying to keep the rate at