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Message
re: I don't understand inheritance tax
Posted on 1/19/16 at 10:09 am to LSURussian
Posted on 1/19/16 at 10:09 am to LSURussian
quote:
echnically not true. Most estate assets have appreciated in value since they were first acquired.
But you do not know that or the amount. So putting a fixed number on that is incorrect.
1
Posted on 1/19/16 at 10:09 am to mailman
Its because its an easy way to buy the have nots votes. Its robbery and should not be allowed.
Posted on 1/19/16 at 10:11 am to slackster
quote:Because you have been subject to inheritance taxes on the estate's assets and he wasn't.
why should your grandfather owe long-term capital gains on $3M in profit in Exxon Mobil stock the day before he dies, yet you, as an heir, owe nothing in LTCG the day after he dies?
Since you've paid inheritance taxes on the total value of the assets, including what your dad used after tax dollars to buy the asset with, you at least get to "step up" the value of the asset to reflect its value that you paid taxes on. (All of this assumes the estate value was large enough to create a taxable inheritance tax event.)
Posted on 1/19/16 at 10:13 am to real
quote:This is probably the most truthful statement I've heard on this issue.
Its because its an easy way to buy the have nots votes.
Posted on 1/19/16 at 10:14 am to Janky
quote:
Then maybe they should get rid of the step up in basis for anyone with estates over $10.9M.
Even if you're estate is under $10.9M I don't really like the arguments for the step-up other than simplicity. Just as dying shouldn't result in a tax windfall for the government, I also believe dying shouldn't result in some incredible tax benefit for the heirs.
If it is going to be taxed at all, it should be taxed in death the same way it would have been taxed in life.
Posted on 1/19/16 at 10:15 am to LSURussian
quote:
Because you have been subject to inheritance taxes on the estate's assets and he wasn't.
Yeah I edited my post because you and I are on the same page. I thought you wanted a removal of the inheritance tax AND a step-up in cost basis. That isn't going to happen.
Posted on 1/19/16 at 10:16 am to LanierSpots
quote:I don't understand what "fixed number" you're referring to in that sentence. And, "incorrect" how?
Most estate assets have appreciated in value since they were first acquired.
But you do not know that or the amount. So putting a fixed number on that is incorrect.
Posted on 1/19/16 at 10:18 am to slackster
quote:I wish!
Yeah I edited my post because you and I are on the same page. I thought you wanted a removal of the inheritance tax AND a step-up in cost basis.
Posted on 1/19/16 at 10:20 am to slackster
quote:
I thought you wanted a removal of the inheritance tax AND a step-up in cost basis. That isn't going to happen.
That is what I was proposing. I know it will never happen but it eliminate the fact that the growth was never taxed.
The worse part of the estate tax is on qualified money. Theoretically, you could have a $1M IRA that gets hit with a 50% estate tax and then a 40% state and Fed income tax rate. Thus leaving only $300k left out of $1M.
Now I know that is not likely with the new higher exclusion amounts but it was a lot more likely when it was only a $1M exeption.
This post was edited on 1/19/16 at 10:24 am
Posted on 1/19/16 at 10:24 am to slackster
quote:Which is my proposal to tax the realized gains whenever the heir sells the asset just as if the deceased person had sold it.
If it is going to be taxed at all, it should be taxed in death the same way it would have been taxed in life.
From my perspective the problem is for families who inherit a family owned business or significant farm land that has appreciated in value over the 40+ years Mom and Dad farmed it.
Too often they have to sell the asset they inherited in order to pay the inheritance taxes.
That seems unfair to me. (Yeah, I know, "life is fair" is not printed on birth certificates.)
Posted on 1/19/16 at 10:30 am to mailman
The only good byproduct is stepped up basis. I agree that it is immoral, though.
Posted on 1/19/16 at 10:35 am to LSURussian
quote:quote:
wouldn't that just compound the problem of the wealth never changing hands?
Only if you think that's a problem.
it is a problem. velocity of money is important for a healthy economy.
Posted on 1/19/16 at 10:44 am to baytiger
quote:That's just the government's way of saying it knows what's best for us serfs.
it is a problem. velocity of money is important for a healthy economy.
I don't subscribe to that idea.
The purpose of taxes should be to pay for the government's necessary expenditures, not to create ways to socially engineer the country's citizens way of life.
Posted on 1/19/16 at 10:57 am to Spankum
You have to inherit one hell of a lot of money before you pay a penny of inheritance tax.
And that justifies it? Inheritance taxes are nothing more than redistribution and confiscatory policies with some class envy wrapped around them.
And that justifies it? Inheritance taxes are nothing more than redistribution and confiscatory policies with some class envy wrapped around them.
Posted on 1/19/16 at 10:58 am to yellowfin
quote:
if the estate is worth 6 million then they probably already have a CPA and they're already planning how they'll avoid the taxes
unfortunately no
Posted on 1/19/16 at 11:32 am to LSURussian
quote:
Too often they have to sell the asset they inherited in order to pay the inheritance taxes.
That seems unfair to me. (Yeah, I know, "life is fair" is not printed on birth certificates.)
My disdain for the tax not withstanding, this is avoidable in plenty of cases and is used he result of poor planning and/or an incredibly untimely death. I've met with clients who had estates north of $35M due to small businesses and they're just now starting to make arrangements. The fact that things got that out of hand from a planning standpoint is usually because the didn't give a shite, didn't get any competent advice, or some combination of the two.
The tax doesn't seem to be going away so I don't have a ton of sympathy for someone who is worth more than $5M yet finds a way to be caught off guard.
Posted on 1/19/16 at 11:44 am to slackster
quote:I agree with all of that. I just wish we didn't have to plan so diligently for our death just to keep the government from confiscating what we've worked hard to accumulate and only want to pass along to our children even if it does keep financial planners and tax CPA's employed.
this is avoidable in plenty of cases and is used he result of poor planning and/or an incredibly untimely death.
Posted on 1/19/16 at 11:46 am to LSURussian
quote:
I agree with all of that. I just wish we didn't have to plan so diligently for our death just to keep the government from confiscating what we've worked hard to accumulate and only want to pass along to our children
x1000000
Posted on 1/19/16 at 11:50 am to SoFla Tideroller
quote:
You have to inherit one hell of a lot of money before you pay a penny of inheritance tax. And that justifies it? Inheritance taxes are nothing more than redistribution and confiscatory policies with some class envy wrapped around them.
Exactly. It literally provides less than 1% of the federal tax revenue. If you want to raise revenue, estate tax doesn't amount to a hill of beans. To make more estates pay higher taxes is purely class warfare, it does not raise revenue hardly enough to make a difference.
Posted on 1/19/16 at 1:15 pm to LSURussian
quote:
It's Class Warfare
If that's the case
the poors are losing
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