The House passed the Senate Bill and it is anticipated that the President will sign the bill. Basically, for 2010 (yes 2010) the estate tax exclusion is $5,000,000 with complete step up in basis, or you can opt out of the estate tax with carryover basis of $1.3. This is a significant planning opportunity for estate taxes. In some cases (if the estate is $5 million or less) it would be best to file the estate tax return and get a step up in basis. For those just above $5M closer evaluation is required to determine whether it is better to pay a little estate tax and get a step up or take carryover basis. You have 9 months after the enactment of the act to file either the estate tax return or Form 8939 for the carryover basis. Note there are huge penalties for failing to “declare” which you are doing. For 2010 gift tax exemption stays at $1M and both estate and gift tax rate is capped at 35%.
After 2010 gift and estate tax is again rejoined with a $5M exemption for both and a top rate of 35% with complete step up in basis.