George Steinbrenner, from the Washington Post

I can only imagine that, were I still in public accounting, yesterday and today would be a veritable feast of discussion over the death of George Steinbrenner. The Yankee owner rarely made a misstep, even in the timing of his death.

This interesting article in the Washington Post spells out the estate tax ramifications for his heirs. To translate all the gobbledy-gook that numbers folks tend to clutter everything up with – his heirs will not pay one penny in estate tax. $1.15 billion estate value/$0 estate tax.

I was still in public accounting when this little rule was passed. While I don’t want to confuse people and give them the impression that I still do taxes or practice public accounting in any form, I do want to put the other side of this story out there.

Yes, Steinbrenner’s estate will pay no estate tax because he died during 2010, a year that Congress decreed estate tax free years ago. However, his heirs will likely pay tax on all of the things they inherit at a much higher estate tax rate, and they will be hard pressed to avoid paying much, much more because of the no-tax rule this year.

Normally, estates get to value assets as of the date of death. Because many assets normally appreciate (the past couple of years notwithstanding), getting to claim what they’re worth at death is a great deal for an heir. Instead of valuing a baseball team at the paltry few million Steinbrenner likely paid for it, the heirs could value it at what it was worth yesterday, the day he died, which is much, much, much more.

Because no estate tax will be paid, the value of their shares will be what he paid for them. When they die and pass them along, the tax rate they are going to pay is currently set at 55%, though with our Congress that could always change.

This isn’t the “deal” it appears to be.