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re: I don't understand inheritance tax
Posted on 1/19/16 at 9:56 am to LanierSpots
Posted on 1/19/16 at 9:56 am to LanierSpots
quote:Technically not true. Most estate assets have appreciated in value since they were first acquired.
Those funds have been taxed numerous times by the people who earned them.
So, in effect, only the original funds used to buy the asset were after tax dollars. The unrealized profits on the assets have never been taxed...YET.
What I would like to see is that when someone dies if he leaves the estate to his direct heirs, they assume the deceased person's cost basis and only would pay capital gains tax whenever they sell they assets just as if the dead person had sold the assets while alive.
4
Posted on 1/19/16 at 9:58 am to LSURussian
quote:wouldn't that just compound the problem of the wealth never changing hands?
What I would like to see is that when someone dies if he leaves the estate to his direct heirs, they assume the deceased person's cost basis and only would pay capital gains tax whenever they sell they assets just as if the dead person had sold the assets while alive.
part of the reason we have inheritance taxes is to prevent old-world-style aristocracy
(I don't really have much of my own opinion on estate taxes, as it'll probably never be my problem)
This post was edited on 1/19/16 at 9:59 am
Posted on 1/19/16 at 10:03 am to LSURussian
quote:
What I would like to see is that when someone dies if he leaves the estate to his direct heirs, they assume the deceased person's cost basis and only would pay capital gains tax whenever they sell they assets just as if the dead person had sold the assets while alive.
ETA: I completely misread your post. I thought you were advocating for a step-up in cost basis for everyone and elimination of the inheritance tax. That would be illogical.
You're much more likely to see the opposite happen, and I'm not sure there is really anything wrong with that.
I'm not a huge fan of the step-up in cost basis from a logical standpoint - 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?
I know advocating for taxes is risky business on the OT, but if you're going to have them, that seems much more logical than the cost basis step up. I understand it may not be as practical since older record keeping may be lacking, but going forward it shouldn't be an issue with new generations.
This post was edited on 1/19/16 at 10:11 am
Posted on 1/19/16 at 10:04 am to LSURussian
quote:
Technically not true. Most estate assets have appreciated in value since they were first acquired. So, in effect, only the original funds used to buy the asset were after tax dollars. The unrealized profits on the assets have never been taxed...YET. What I would like to see is that when someone dies if he leaves the estate to his direct heirs, they assume the deceased person's cost basis and only would pay capital gains tax whenever they sell they assets just as if the dead person had sold the assets while alive.
Then maybe they should get rid of the step up in basis for anyone with estates over $10.9M.
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.
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