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re: I don't understand inheritance tax
Posted on 1/19/16 at 3:46 pm to FelicianaTigerfan
Posted on 1/19/16 at 3:46 pm to FelicianaTigerfan
So, she is not a widow just a single mother? The exemption is hers. The heirs will have their own for when they die. The heir's exemption does not have any impact on inheriting the assets.
0
Posted on 1/19/16 at 3:48 pm to Janky
quote:
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.
Precisely. I'm fully aware of the current tax structure, and if a change is going to be made (a practical change at least), they should remove the stepped-up cost basis while removing the inheritance tax completely. No step-ups any more, which is a weird concept in the first place, which means more potential revenue for the government, but it is offset by the removal of the inheritance tax for all estates.
Posted on 1/19/16 at 3:51 pm to PygmalionEffect
quote:
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.
It is my understanding that the cost basis is stepped up to the market value of the asset at the time of death, not necessarily the time that the succession is completed. That may seem like semantics, but given how long these things can take, it can be a pretty significant difference.
Posted on 1/19/16 at 3:51 pm to slackster
quote:
Precisely. I'm fully aware of the current tax structure, and if a change is going to be made (a practical change at least), they should remove the stepped-up cost basis while removing the inheritance tax completely. No step-ups any more, which is a weird concept in the first place, which means more potential revenue for the government, but it is offset by the removal of the inheritance tax for all estates.
Are you talking about the estate tax? There is no federal inheritance tax.
Posted on 1/19/16 at 3:54 pm to slackster
quote:
It is my understanding that the cost basis is stepped up to the market value of the asset at the time of death, not necessarily the time that the succession is completed. That may seem like semantics, but given how long these things can take, it can be a pretty significant difference.
You can make an alternate valuation election for the valuation to be the FMV 6 months after DOD.Assuming the estate is subject to federal estate tax and the election reduces that tax.
Posted on 1/19/16 at 4:00 pm to MSTiger33
quote:
You can make an alternate valuation election for the valuation to be the FMV 6 months after DOD.Assuming the estate is subject to federal estate tax and the election reduces that tax.
Can this be done for any step-up in cost basis or only in those instances where an estate tax will be owed?
Imagine the estate has only $500k in assets, can you choose another valuation date for the step-up or are you stuck with date of death?
Posted on 1/19/16 at 4:02 pm to MSTiger33
quote:
Are you talking about the estate tax? There is no federal inheritance tax.
Yes - the terms have been used interchangeably in this thread beginning with the OP's title.
Posted on 1/19/16 at 4:15 pm to slackster
The election must lower the estate tax liability. In your example, no estate tax is due on $500k. Even if it was, you can't use the election to increase the stepped up basis amount.
Posted on 1/19/16 at 5:08 pm to MSTiger33
That's what I thought, thanks.
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