Can you please clarify if the $1 million per individual ($2 million per couple) proposed exemption from capital gains tax in the paragraph below ( from p 63 of the administration’s Green Book outlining the new tax proposals) applies to just the calculated capital gain on the assets at the time of the gift or bequest or on the market value of the assets themselves at the time of the gift or bequest ? I think it is meant to be on just the capital gains themselves but not sure. It would make a big difference. Also what will happen if some or all of the assets would realize a capital loss at the time of gift or bequest? Presumably if some of the assets are gains and others losses they net out, but what if the net result is an overall loss- what happens to the basis of the assets gifted or bequeathed?

“In addition to the above exclusions, the proposal would allow a $1 million per-person exclusion from recognition of other unrealized capital gains on property transferred by gift or held at death. The per-person exclusion would be indexed for inflation after 2022 and would be portable to the decedent’s surviving spouse under the same rules that apply to portability for estate and gift tax purposes (making the exclusion effectively $2 million per married couple). The recipient’s basis in property received by reason of the decedent’s death would be the property’s fair market value at the decedent’s death. The same basis rule would apply to the donee of gifted property to the extent the unrealized gain on that property at the time of the gift was not shielded from being a recognition event by the donor’s $1 million exclusion. However, the donee’s basis in property received by gift during the donor’s life would be the donor’s basis in that property at the time of the gift to the extent that the unrealized gain on that property counted against the donor’s $1 million exclusion from recognition.”