Basis Step up
With the proposal being considered to eliminate a step up in basis at the time of inheriting and causing a capital gains tax to be paid on the difference between an asset’s original purchase price and its value at the date of death, what will happen if the assets has declined in value from the original purchase date to the date of death? Will they continue to do a step down in basis or allow the unrealized loss to be carried forward to the person inheriting the asset? It would be symmetrical with the immediate capital gains tax payable to allow the unrealized loss to continue, but not sure that will be the case. Thanks.
Permalink Submitted by Alan - IRA critic on Thu, 2021-05-20 13:53
It should be the case if there is any equity to such a bill. However, I am not aware that any specifics have been developed to date. In addition, other than IRD assets (tax deferred accounts), the basis adjustment of the past has existed to prevent income tax duplication with the estate tax, another potential issue.
Permalink Submitted by John L. on Fri, 2021-05-21 15:40
hoopsjs12,
May I ask where you read about this proposal? Do you have a link? That would be terrible.
Permalink Submitted by Pat Chesp on Sun, 2021-05-23 22:39
https://www.cnbc.com/2021/03/30/senate-dems-propose-capital-gains-tax-at-death-with-1-million-exemption.html
Permalink Submitted by John L. on Sun, 2021-05-23 23:37
Thank you for the link, Pat1111. Much appreciated.
Permalink Submitted by Maria Ku on Thu, 2021-05-27 18:29
This new law would apply to very high income or very weathly individuals only – if they’re over a certain income or wealth level exceeding a threshold.
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