We all know what they say about death and taxes, but there is now some question about whether the estate tax will or won't be around for 2010. As of now, there is no estate tax after Congress failed to extend the Tax Act for 2010, allowing the estate tax to lapse. But Allen B. Craig III, head of the tax practice group at Gardere Wynne Sewell LLP, says it is certain that Congress will seek a retroactive amendment in 2010, however any such amendment will likely result in lawsuits challenging the constitutionality of retroactivity for transactions and deaths that occurred before enactment

The Economic Growth and Tax Relief Reconciliation Act of 2001 imposes a 45 percent tax on estates valued over $3.5 million($7 million per couple). If Congress fails to amend the law in 2010, the Tax Act will automatically reinstate the estate tax in 2011 with an exemption amount of $1 million, not $3.5 million, and a maximum tax rate of 55 percent.

Writes the Wall Street Journal yesterday:
President-elect Barack Obama and congressional leaders plan to move soon to block the estate tax from disappearing in 2010, suggesting the levy might outlive the "Death Tax Repeal" movement that has tried mightily to kill it.
The Democratic stance on the estate tax contrasts with Mr. Obama's reluctance to press forward with his campaign pledge to raise income-tax rates on top earners, which he worries could have an adverse economic impact during a recession.

But Democrats are determined to act quickly to prevent the estate tax's scheduled repeal. Elimination of the levy on big inheritances was approved by Congress under President George W. Bush in 2001, with rollbacks phased in slowly and its full elimination slated to take effect next year.
The Senate Finance Committee will move within weeks on legislation to reverse that law, and Mr. Obama is expected to detail his estate-tax preservation proposal in his budget next month, congressional tax writers said.