On December 17th, President Obama signed into law the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” (referred to in this e-Alert as “the Act”), which resulted from the compromises reached by the President and Republican congressional leaders involving the extension of the Bush income tax cuts and of payments to long-term unemployed persons as well as important compromises in the estate, gift, and generation-skipping transfer tax laws. The Act represents a bipartisan effort, and there is not generally complete satisfaction with all of the provisions of the Act on both sides of the aisle.

Although the Act is a welcome gift from Washington in the closing days of 2010, in the sense that it gives us some “breathing room” with respect to certain tax planning issues that would otherwise have reared their heads at the beginning of 2011, in many respects the Act creates more significant and problematical issues resulting primarily from the fact that it does not solve those issues. Rather, it “defers” the need to address solutions to those issues until 2013, when many of the provisions of the Act expire.

The provisions of the Act dealing with estate, gift, and generation-skipping transfer (“GST”) taxes include the following...