News Letter 15

News Letter 15 - October 1998

Tax Table Adjusted - Technical Correction Failed

The Internal Revenue Restructuring and Reform Bill of 1998 failed to correct a technical error in the Taxpayer Relief Act of 1997.

Prior to the Taxpayer Relief Act of 1997 a 5-percent surtax was imposed upon cumulative taxable transfers between $10,000,000 and $21,040,000 to phase out the benefits of the graduated rates and the unified credit. The 1997 Act increased the unified credit beginning in 1998, from an effective exemption equivalent of $600,000 to an effective exeption equivilent of $1,000,000 in 2006. A conforming amentment was made to the 5-percent surtax provision in section 2001(c)(2) that was intended to reflect the increased unified credit. This amendment, by mistake reduced to upper limit of the 5-percent surtax to $17,184,000. The technical correct to correct the error failed to pass so the result is that starting in 1998, the upper limit to the 5-percent surtax will be $17,184,000.

Family-Owned Business Interest Deduction

The Taxpayer Relief Act of 1997 added two new exemptions. One of these exemptions was a new exemption for family business interests and was contained in a new section 2033A. The Internal Revenue Service Restructuring and Reform Bill of 1998 moved this provision to a new section 2057 and changed the provision from an exemption to a deduction. This has caused several computational problems.

The amount of allowable unified credit might vary because of the amount of this deduction.

The amount of tax that qualified for the special 2% interest rate under sec 6166 might vary because of the amount of this deduction.

The amount of this deduction can become interrelated because the IRS has taken the position that this deduction must be adjusted to avoid double deductions (reduced by marital deduction out of property, tax paid out of property, etc.).

We have implimented simple support for this provision that adjusts the unified credit and the amount drawing 2% interest. A provision has also been made to Version 3.00 to reduce the input deduction by computed tax and interest using our complex toggle.

Prepare File Support for Sch. T and Sch. U

Support for computation of the new Schedule T and Schedule U to Form 706 has been added for Prepare Files in Inter-Est. (Prepare Files do not support interrelated Sch. T like Case Files do.)

Current Changes since the last Newsletter

The current release of Version 3 is 36 and the current release of Version 2 is 66. Major changes made since the last newsletter were:

New York computation changed to allow for the phase out of their estate tax. After 1/31/2000 New York will be a pick-up tax state.

Additional interest feature to allow states to adopt the federal 2% rate.

Limit to the 5% surtax adjusted to $17,184,000 for dates of death after 1997.

Error to computation of New York unified credit corrected. This error only showed up on smaller estates.

Date routine changed. The old routine was accurate from 1900 to 2100. The new routine is accurate from 1583 to 3300. Good enough for most purposes.

Kansas provision changed. Kansas changed to a pick-up tax state as of 7/1/98.

Tennessee has increased the exemption allowable. Also computation method has been corrected.

Estate tax exemption for bequests to family members increased for Oklahoma. Also added support for additional exemption for bequests of qualifying business interests to qualifying heirs.

Support for new Schedule U, Qualified Conservation Easement Exclusion added to Prepare File computations.

Support for new Schedule T, Qualified Family-Owned Business Interest Deduction added to Prepare File computations.

Case files received ability to compute interrelated Schedule T Deductions.

North Carolina input corrected.

You can now elect whether the other qualified tax draws the regular rate or 45% of the regular rate for state sec. 6166 computations.

New Web Site and New Email Address

We are posting changes to Inter-Est to the "What’s New" page as soon as changes are made. Check it out.

The web site is at:

www.inter-est.com.

Our Email address is:

cammack@inter-est.com.

Maintenance and Support

If you are having trouble with a computation using Inter-Est, please call us. We provide support to all of our users.

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Cecil Cammack, Jr. dba
Cammack Computations Co.
P. O. Box 725, Cleburne, TX 76033
Voice: 1 (800) 594-5826
Email: cammack@inter-est.com
Price Information

	New York computation changed to allow for the phase out of their estate tax. After 1/31/2000 New York will be a pick-up tax state.
	Additional interest feature to allow states to adopt the federal 2% rate.
	Limit to the 5% surtax adjusted to $17,184,000 for dates of death after 1997.
	Error to computation of New York unified credit corrected. This error only showed up on smaller estates.
	Date routine changed. The old routine was accurate from 1900 to 2100. The new routine is accurate from 1583 to 3300. Good enough for most purposes.
	Kansas provision changed. Kansas changed to a pick-up tax state as of 7/1/98.
	Tennessee has increased the exemption allowable. Also computation method has been corrected.
	Estate tax exemption for bequests to family members increased for Oklahoma. Also added support for additional exemption for bequests of qualifying business interests to qualifying heirs.
	Support for new Schedule U, Qualified Conservation Easement Exclusion added to Prepare File computations.
	Support for new Schedule T, Qualified Family-Owned Business Interest Deduction added to Prepare File computations.
	Case files received ability to compute interrelated Schedule T Deductions.
	North Carolina input corrected.
	You can now elect whether the other qualified tax draws the regular rate or 45% of the regular rate for state sec. 6166 computations.