re: Capital Gains at Death

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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.

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If estate tax is paid on an asset, then the step up should be granted.

Under my idea, it would be an either/or. Either you pay estate tax on an asset at death and get a step-up, or, you would pay capital gains tax on an asset at full gain when it's actually sold.

If your real estate example, if they are subject to the estate tax, then nothing changes from current practice. If they are not subject to the estate tax, they only are subject to capital gain tax when the real estate is sold.