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re: I don't understand inheritance tax
Posted on 1/19/16 at 1:25 pm to FelicianaTigerfan
Posted on 1/19/16 at 1:25 pm to FelicianaTigerfan
quote:
Say a widow has 6 million in estate and leaves it to her two children. Does the 5.4 apply to what's being left or what's being received?
Widow can possibly use her husband's unused exemption (DSUE).
LINK
This post was edited on 1/19/16 at 1:31 pm
3
Posted on 1/19/16 at 1:35 pm to CtotheVrzrbck
quote:
That's why it is best to distribute inheritance while grampy is still alive.
Or better yet, put that money in a wealth transfer product like single premium life insurance, or a fixed annuity.
Posted on 1/19/16 at 1:36 pm to TheOcean
That is correct. The spouse's exemption amount does roll over to the living spouse. That used to not be the case and that is why A/B trusts were used.
Posted on 1/19/16 at 1:37 pm to mailman
quote:
Tax me because I'm rich sure, but after I make money and die I should be able to give my kids everything without being taxed further.
If you have unrealized capital gains, then those gains haven't been taxed at all.
Posted on 1/19/16 at 1:39 pm to boxcarbarney
quote:
Or better yet, put that money in a wealth transfer product like single premium life insurance, or a fixed annuity.
Just an FYI, but depending on how those products are structured they may not alleviate any of the inheritance tax obligations.
Posted on 1/19/16 at 1:40 pm to SpidermanTUba
quote:
If you have unrealized capital gains, then those gains haven't been taxed at all.
Sure, which is why the cost-basis step up should go the way of the dinosaur along with the inheritance tax.
Posted on 1/19/16 at 1:43 pm to slackster
quote:
Sure, which is why the cost-basis step up should go the way of the dinosaur along with the inheritance tax.
Except if the asset is never sold or is always like-kind exchanged - the gains would never be taxed.
Posted on 1/19/16 at 1:47 pm to mailman
The original intent of the tax was to prevent us from having oligarchs, like in Mexico, where 1% has 99% of the wealth.
The problem is that they never set the rate using something like the CPI or GDP, so the tax burden has increasingly crept downward to non uber wealthy. $3.5 million isn't really that much nowadays, in terms of assets, especially if it's being split several ways. Add up the value of property, your pension investments, a house, etc., and you can get to that number pretty quickly without being what most would call "wealthy."
The problem is that they never set the rate using something like the CPI or GDP, so the tax burden has increasingly crept downward to non uber wealthy. $3.5 million isn't really that much nowadays, in terms of assets, especially if it's being split several ways. Add up the value of property, your pension investments, a house, etc., and you can get to that number pretty quickly without being what most would call "wealthy."
Posted on 1/19/16 at 1:47 pm to SpidermanTUba
quote:What a shock!! The lifetime government employee wants the government to take in more taxes!
Except if the asset is never sold or is always like-kind exchanged - the gains would never be taxed.
Posted on 1/19/16 at 2:01 pm to HarryBalzack
quote:
$3.5 million isn't really that much nowadays, in terms of assets, especially if it's being split several ways. Add up the value of property, your pension investments, a house, etc., and you can get to that number pretty quickly without being what most would call "wealthy."
Meh, $3.5M net worth is well inside of the wealthy band.
That doesn't change my stance on how ridiculous the tax is, but you aren't upper-middle class AND above the $3.5M net worth level.
Posted on 1/19/16 at 2:05 pm to slackster
Either way we both end up opposed to it. 
Posted on 1/19/16 at 2:09 pm to SpidermanTUba
quote:
Except if the asset is never sold or is always like-kind exchanged - the gains would never be taxed.
Is that a problem?
The vast majority of assets that have increased in value are derived from tax-paying entities in the first place.
It is disingenuous to harp on the untaxed long term gains when in all likelihood that share of Exxon Mobil is ownership in a company that has paid federal and state taxes the entire time you've owned it. The same is true with ownership in a small business and even ownership in a home (property taxes).
Perhaps there is someone out there who bought $1,000,000 worth of physical gold and now it is worth $15 million or something ridiculous like that, and then you MIGHT have a point, but in general you're way off.
Posted on 1/19/16 at 2:15 pm to TheOcean
quote:
quote:
Say a widow has 6 million in estate and leaves it to her two children. Does the 5.4 apply to what's being left or what's being received?
Widow can possibly use her husband's unused exemption (DSUE).
LINK
It applies to her net estate. DSUE is only available if the first to die filed a 706. This is why you should use a credit shelter trust in the first to die's estate if the couple's combined estate value is close to or over the limit.
Posted on 1/19/16 at 2:18 pm to mailman
Don't feel bad, Captain Byron Hadley didn't understand the law either and nearly pushed an accountant turned inmate over a prison wall.
Posted on 1/19/16 at 2:29 pm to yoga girl
quote:
Did you not read today that the 62 people who are superrich have a net worth greater than the combined net worth of ONE HALF OF THE WORLD's POPULATION?
I heard about that yesterday here on the PT board. I think the government should confiscate 100% of their assets and redistribute to the bottom 50% of the country. They should then be jailed for the remainder of their lives to teach them a lesson about being so successful. It's not fair.
Posted on 1/19/16 at 2:36 pm to slackster
Just so everyone keeps in mind, if you remove the space in "the IRS" it spells "theirs."
Posted on 1/19/16 at 3:24 pm to slackster
quote:
slackster
quote:
Sure, which is why the cost-basis step up should go the way of the dinosaur along with the inheritance tax.
Are you trolling or are you really that confused?
For four pages now, various posters have tried to explain to you that if Gramps paid $10 a share for Exxon years ago and still has the shares when he dies.
Whomever those shares goes to gets the shares at the stepped up basis of the market value of the shares at the time they take possession of them in the inheritance.
If Exxon is selling for $100 when the child or grandchild gets the stock for free through the inheritance, they can turn around and sell them for $100 and will owe no capital gains taxes at all.
Inheritance creates a stepped up basis in the stock.
Posted on 1/19/16 at 3:32 pm to PygmalionEffect
I believe he (like me) is saying that the step up should go away therefore creating a taxable gain for the heir. Then do away with the inheritance tax.
Posted on 1/19/16 at 3:43 pm to TheOcean
quote:
Widow can possibly use her husband's unused exemption (DSUE).
Ok, widow was a bad example. Single mother with two dependents has 6 million ion real-estate. If she passes away without a will, does the 5.4 apply to her, or each dependent
Posted on 1/19/16 at 3:45 pm to FelicianaTigerfan
She has the estate exemption, not the heirs. 1 heir or 50 heirs, $5.4M is all she has with which to work.
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