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Elimination of the step-up in basis at death would be an administrative nightmare for taxpayers. How many have all of the records needed to establish basis in all of their assets that their heirs can easily access and make sense of after they've died?
If you're not able to provide evidence of basis, then your basis is $0 and you get taxed on gross proceeds from the sale of an asset.
Big win for the government and a provision certain to put the IRS and taxpayers in battles for years to come.
Would it be unreasonable to expect an owner of an asset to keep records of their cost? We do reasonably expect it while they are alive don’t we?
Would it be unreasonable to expect an owner of an asset to keep records of their cost? We do reasonably expect it while they are alive don’t we?
Absolutely and I'm sure when people get to an advanced age or are dealing with a terminal illness for a period of time also get their affairs in order so those situations would be less of an issue.
The problems come into play when there are sudden deaths, by accident, medical condition, whatever. Things happen, and I'm sure no one is perfect in their record keeping that an heir can just step right in and find every bit of information they may need.
The Biden plan significantly reduces the lifetime gift tax exclusion.
Currently, the gift and estate tax exemption amount is $11.58 million per person and $23.16 million per married couple in 2020, created by the Tax Cut & Jobs Act of 2017. This enhanced exemption amount is set to automatically sunset at the end of 2025.
If Biden and Democratic leaders in the House & Senate have signaled the sunset of the enhanced TCJA exemption amount may be accelerated -- or, gasp, -- reduced even further; a number of $3 Million is being floated right now.
The Biden plan eliminates the step-up in basis at death for inherited assets. Biden has signaled the estate tax rate could increase from its current 40% rate to 60% or even higher.
Another version of the plan is to tax inherited assets on their paper gain right away in addition to the general estate tax.
Coupled with the Biden Plan to increase capital gains taxes, everyone I know says they will
Sell off a bunch of appreciated assets this tax year, locking in the current capital gains tax rate. This will generate a lot of tax revenue for the federal government.
Accelerate gifting to their kids - gifting up to the current maximum this calendar/tax year ($11.58/$23.16 million), locking in the current exemption rather than waiting for a potential Biden roll-back or until the end of 2025 for the currently scheduled sunset.
Estate planning attorneys are quite busy right now, setting up trusts to protect kids newfound wealth - for example, a 20-something child who will receive gifted a large chunk of money needs to have that wealth protected from a hypothetical spouse & from plaintiff's attorneys.
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Our 20-something daughter is going to become a moderately wealthy woman this year.
My wife and I are in the process of gifting most everything of value we have to our kids too.
I don't understand why people don't realize that our national debt is off the wall! One way or another, somehow this has to be paid down.
The economy, workers, small business are in bad shape. So little tax coming in to pay for everything. I would think, no matter who wins, this debt has to be paid down or Social Security, Medicare and States will all go under.
What do you all suggest could solve this problem? We can't continue like this...
It's not only the tax revenue shortfall, but the massive COVID related spending increases. The equation is screwed up from both sides.
Have not done the math under a Biden suggestion, but like most Americans, my taxes went up (as a solid middle class earner) when the clown gave the huge tax cut, financed by more debt, to his cronies.
Don't forget, whatever else, people are going to be stunned next April when they have to recognize all the gubment handouts and postponed tax with-holdings on their tax filing. Wait till you hear people squeal when they have to write that check----from funds they don't even remotely have. Wonder if Trump will send them a letter reminding them that HE did that to them?
The article linked by OP does say that people in the 4th quintile (sourced elsewhere as earning between $80k-$130k) will see their effective tax rate increase from 19.4% up to 19.8%, or by $320-$520 per year. That would include my household income, and I would be happy to pay an additional $500 to solidify social security and stop the skyrocketing deficits.
Problem is they don't stop there. They collect $1 and spend $2. So we increase taxes to $2 and they spend $3. Increase taxes again to $3 and they spend $4. It will never end.
Have not done the math under a Biden suggestion, but like most Americans, my taxes went up (as a solid middle class earner) when the clown gave the huge tax cut, financed by more debt, to his cronies.
Don't forget, whatever else, people are going to be stunned next April when they have to recognize all the gubment handouts and postponed tax with-holdings on their tax filing. Wait till you hear people squeal when they have to write that check----from funds they don't even remotely have. Wonder if Trump will send them a letter reminding them that HE did that to them?
The economic incentive payments do not have to be paid back. It was an advanced payment of a new tax credit people will be entitled to on their 2020 tax returns. If they wind up not qualifying for the credit, they still don't have to pay the money back.
Unemployment has always been taxable, anyone not planning for that is just a fool.
The new deferral of social security and medicare taxes also has been widely publicized as having to be paid back. If people aren't planning for it, again they're just fools.
All taxes will go up sooner or later since the Republicans' tax reform was about creating more loopholes. Trump specifically benefitted from the new loopholes created for pass-through businesses since he has 500 LLC's.
They generally don't away under the Democrats. The very specific loopholes and the large amount of money generated by a relatively small number of individuals and corporations means that they will pay off Congress every time they bark about changing the tax code.
My taxes go up $60 a year or 16 cents a day. Well worth it to stop the 24/7 Trump reporting onslaught. Would love to go back to a world where I don't constantly get bombarded with Trump news.
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