As the deal President Barack Obama reached with Republicans to extend the expiring income tax cuts moves toward final approval, House Democrats are plotting their last stand against the bill.
That final fight looks to be about the inevitable meeting of death and taxes.
On Monday, the Senate cleared a procedural hurdle, voting to vote again this week on the proposal, which will continue the current income tax rates for all individuals. After senators sign off on the merits of the bill, it then will go to the House for consideration.
House Democrats, however, are still angry that their party's leader sidestepped them to reach a compromise with the political opposition. And they are plotting one last tax stand.
Their target is the estate tax.
Under the Obama/Grand Old Party deal, estates worth less than $5 million would not be taxed. That exclusion amount would be indexed each year for inflation.
Estates valued at more than $5 million (or more based on inflation in years to come) would be taxed the maximum estate tax rate of 35 percent.
These provisions would take effect Jan. 1, 2011, and be on the tax books through 2012.
For those who die in 2010 while there is no federal estate tax, estate executors can choose whether to apply the 2010 no-tax rules to the estate or use the 2011-2012 provisions, which include stepped-up basis rules for heirs.
Beneficiaries of some estates might find that an estate tax and its tweaks to the basis rules work better for them. In these cases, the value of assets they inherit would be the value of the property at the time of the original owner's (aka the decedent's) death.
For example, if Aunt Marie bought 100 shares of XYZ stock in 1942 for $10, her basis is $1,000. When she died in November 2010, those XYZ shares were selling for $100 each, making them worth $10,000.
She leaves you the XYZ stock and you want to sell it.
Under the current estate tax law, Aunt Marie's estate would not owe any federal taxes. But if you sell the XYZ shares she left you, you'll owe taxes on $9,000 in gain; that's the $10,000 the shares are now worth minus Aunt Marie's original basis of $1,000.
But if you got to step up the basis, you could subtract the shares' $10,000 value when you inherited them from your sales price of $10,000. That wipes out any profit and thereby wipes out any tax.
The choice of estate tax law option probably will survive any attempts by the House to change the overall estate tax provisions. But some Democratic representatives are adamant about lowering the portion of estates exempt from the federal tax and raising the tax rate that would apply.
The preferred House numbers are a $3.5 million estate exclusion limit with a tax rate of 45 percent on those worth more than that.
Will House Democrats win? Probably not. Public opinion polls taken late last week as the compromise was being debated in the press show between 60 percent and 70 percent support it.
Those numbers, along with the clicking legislative clock, are working against tax deal opponents. But it will be interesting to watch the debate.
In addition to tax information on Bankrate, get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.