Check your expiration date if death tax takes a holiday.

• Position: Estate tax - Brief Article - Statistical Data Included - Interview

Roby Sawyers, associate professor of accounting at NC. State University's College of Management, is chairman of an American Institute of Certified Public Accountants task force that recommended repeal of the estate tax in February. President Bush has signed legislation that phases it out. The law raises the exemption -- the amount that can be passed to heirs tax-free -- from $675,000 to $1 million next year, then gradually to $3.5 million in 2009. The top tax rate will shrink from 55% now to 45% in 2009. In 2010, the tax will be repealed. In 2011, barring action by Congress, it will be reinstated at current levels.

This law seems to reward people who die in 2010 and penalize those who die a year later. That didn't come from your task force, did it?

No, definitely not. Actually, in our suggestions for repeal, we strongly opposed any kind of a phaseout. What we've ended up with is a strange provision where you're potentially better off dying, not just in 2010, but potentially in 2008 or 2009, rather than 2011. In 2010, you have to deal with carryover-basis rules, in addition to the repeal of the estate tax.

What are carryover-basis rules?

The carryover-basis rules replace what we have now, which is a full step-up in basis of inherited assets.

What's a step-up?

To give you an example, if Dad buys a stock at $10,000, and it's worth $1 million when he dies, under current law, if he dies this year, you get a full step-u p in the basis of that asset. So when the son inherits that asset, his basis in it is $1 million. So the son can turn around and sell it for $1 million and pay no income tax. When that goes away, or at least partially goes away, in 2010, the son's basis in that asset could be $10,000, the amount Dad paid for that asset. So what happens when the son sells it, he has a $990,000 taxable gain. That's the cost of repeal. Carryover basis is very complex and, in some cases, may result in a taxpayer being worse off than he was previously.

Do you really expect the law to go away, then come back in full force the next year?

I don't think the estate tax is going away. John Buckley, who's on the Democratic staff of the House Ways and Means Committee, called this legislation an unfunded, nonbinding promise by Congress to repeal the estate tax. And I think that's the way a taxpayer and a tax professional have to look at it. It's

just not likely that estate-tax repeal is going to ever take place.

Doesn't this new law make estate planning more...