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re: Capital Gains at Death
Posted on 1/21/15 at 1:52 pm to Bear Is Dead
Posted on 1/21/15 at 1:52 pm to Bear Is Dead
quote:
If I inherit something, I shouldn't have to sell it to pay the damn estate taxes. If I do sell it, now you want to tax me based on what my dead relative paid for it back in the day? Also class warfare against anyone whose family has left something for their kids.
That's not what I'm suggesting. I am saying, keep the estate tax exemption as is. When and if you do sell the stock down the road, you pay the capital gains tax based on the entire gain.
If the dead relative sold it the day before he died, and left you the cash, he'd have to pay capital gains tax on it, right?
In other words, the fact that someone died should not cause an item to not be taxed, if it would have been taxed had the person died and not sold it.
My personal feeling on the estate tax is that it is unfair and punitive and should be eliminated. But this is a different story.
2
Posted on 1/21/15 at 2:27 pm to LSUFanHouston
quote:
That's not what I'm suggesting. I am saying, keep the estate tax exemption as is. When and if you do sell the stock down the road, you pay the capital gains tax based on the entire gain.
It is what you are suggesting, you just don't have malice in your heart like the president. Fact is that people inhereit real estate, which then has to be sold in order to pay the estate taxes. Yes I know there is a 5.25mil exemption, but for someone who just inherited a lot of land, how does it feel to have to sell that land to pay the tax bill?
quote:
If the dead relative sold it the day before he died, and left you the cash, he'd have to pay capital gains tax on it, right?
That's correct
quote:
In other words, the fact that someone died should not cause an item to not be taxed, if it would have been taxed had the person died and not sold it.
But that is the effect. The heirs will sell the property to pay the tax bill on the total amount inherited, and then with no step-up in basis, they will be taxed on the gain that goes all the way back to its original acquisition.
quote:
My personal feeling on the estate tax is that it is unfair and punitive and should be eliminated. But this is a different story.
It is immoral. It doesn't in any way effect the federal budget. The only reason to change it is to redistribute wealth. That's it.
Posted on 1/21/15 at 3:04 pm to LSUFanHouston
I'm not really sure where I come down on this.
On the one hand, the current situation of (effectively) no Estate Tax plus a stepped-up basis disincentivizes an older person from making an otherwise beneficial transaction (Where person owns X, thinks Y will be more valuable than X 10 years after his death even after cap gains on X, but holds on to X because he anticipates that at his death X will be worth more than [Y less Cap Gains on selling X]).
On the other hand, not allowing a step-up basis might keep property in the same family basically forever, because with each generation the tax hit from selling gets bigger and bigger.
On the one hand, the current situation of (effectively) no Estate Tax plus a stepped-up basis disincentivizes an older person from making an otherwise beneficial transaction (Where person owns X, thinks Y will be more valuable than X 10 years after his death even after cap gains on X, but holds on to X because he anticipates that at his death X will be worth more than [Y less Cap Gains on selling X]).
On the other hand, not allowing a step-up basis might keep property in the same family basically forever, because with each generation the tax hit from selling gets bigger and bigger.
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