From the Wall Street Journal:
Senate legislation unveiled Thursday has estate planners asking whether the window has closed for clients to make gifts to children and grandchildren at unusually low tax rates.
Wealth advisers have recently been touting the 35% gift-tax rate in effect in 2010, and the absence of a generation-skipping tax on gifts to grandchildren. Both taxes are scheduled to snap back to 55% on Jan. 1, creating a tax-saving opportunity for year-end gifts.
But the bill authored by Sen. Max Baucus (D., Mont.) would immediately re-impose the generation-skipping tax and raise the gift tax, both to 45% and retroactive to Thursday, Dec. 2.
Those provisions are part of broader legislation to extend expiring tax cuts, which isn't expected to pass the Senate in its current form. Ultimately it will have to be negotiated with Republicans, which could lead to changes on such items as effective dates.
Still, Mr. Baucus's choice to make the higher tax rates effective as of Thursday, instead of when final legislation actually passes, makes gifts in December a riskier proposition, wealth advisers say.