9 ms·

That’s the point, the heirs don’t have to. Suppose I own $1 million worth of Bitcoin I mined back in the day. If I sell the day before I die I’ll owe $200,000

That’s the point, the heirs don’t have to. Suppose I own $1 million worth of Bitcoin I mined back in the day. If I sell the day before I die I’ll owe $200,000 in long term capital gains taxes. But if I die, leave those coins to you, and you sell them the day you inherit them for the same $1 million, you owe no capital gains taxes. Edit: if this is surprising, it should be. The step up basis is insane.

taeric 5y ago
Yeah. I've tried to convey this point to family before. I'm not sure why they don't believe me. They are convinced the "death tax" is some nefarious thing.
- mlindner 5y ago
  The proposed "death tax" idea is to make inheritance a taxable event. I'm against that. I'm for however that capital gains carry past death. If you inherent cash, that cash has already had taxes paid for that. It shouldn't be taxed again like some "death taxes" propose to do. If you inherit stock, then sell it, the basis date for that stock should be the date it was bought, not the date you received it.
  - nobodyandproud 5y ago
    It’s not a bad compromise. Even that, I’m sure, would end up getting mangled over technicalities and added loopholes.
  - taeric 5y ago
    Sorta. Inheriting cash is no different than being gifted cash. And you would have to report that as income. It only gets complicated with capital assets. And your proposal works for simple stock holdings. Consider, if you are the beneficiary of a retirement account, you already have to withdraw percentages every year. So that is covered? Or not?
    - mlindner 5y ago
      > Sorta. Inheriting cash is no different than being gifted cash. And you would have to report that as income. Right and I don't think gifts should be taxed either. It's already been taxed.
      - taeric 5y ago
        On this, we'll just have to disagree. :( At some level, most (all?) money has already been taxed. Some entities can write off expenditures as a deduction. Most of us can't. Consider, my income had already been taxed. Why do I have to pay sales tax on purchasing something? Edit: and in case you fix on sale's tax being different from income. Payroll for businesses comes out of profit. Which comes from that same transaction. So, somebody's income is ultimately funded from a sales made with money that had been taxed.
      - JAlexoid 5y ago
        Oh.... Cool! So I'll give you $200k as a gift and you gift me your house "as a gift" ;)
abstractbarista 5y ago
I think that's good and correct. The inheritor hasn't had any capital gain. Because the deceased never sold, they didn't either.
- singron 5y ago
  If the inheritor somehow has no capital gain, shouldn't the entire basis be taxed as income instead? E.g. if I win a car in a contest or get paid in stock for working, I have to pay income tax on the current value when I receive it.
nullc 5y ago
>The step up basis is insane. Basis step up is extremely pragmatic, because it can be extremely difficult to establish the cost basis of a dead persons assets. It's offset by the estate tax -- change your figures to $20 million and the situation is substantially equalized.

taeric 5y ago

Yeah. I've tried to convey this point to family before. I'm not sure why they don't believe me. They are convinced the "death tax" is some nefarious thing.

mlindner 5y ago
The proposed "death tax" idea is to make inheritance a taxable event. I'm against that. I'm for however that capital gains carry past death. If you inherent cash, that cash has already had taxes paid for that. It shouldn't be taxed again like some "death taxes" propose to do. If you inherit stock, then sell it, the basis date for that stock should be the date it was bought, not the date you received it.
- nobodyandproud 5y ago
  It’s not a bad compromise. Even that, I’m sure, would end up getting mangled over technicalities and added loopholes.
- taeric 5y ago
  Sorta. Inheriting cash is no different than being gifted cash. And you would have to report that as income. It only gets complicated with capital assets. And your proposal works for simple stock holdings. Consider, if you are the beneficiary of a retirement account, you already have to withdraw percentages every year. So that is covered? Or not?
  - mlindner 5y ago
    > Sorta. Inheriting cash is no different than being gifted cash. And you would have to report that as income. Right and I don't think gifts should be taxed either. It's already been taxed.
    - taeric 5y ago
      On this, we'll just have to disagree. :( At some level, most (all?) money has already been taxed. Some entities can write off expenditures as a deduction. Most of us can't. Consider, my income had already been taxed. Why do I have to pay sales tax on purchasing something? Edit: and in case you fix on sale's tax being different from income. Payroll for businesses comes out of profit. Which comes from that same transaction. So, somebody's income is ultimately funded from a sales made with money that had been taxed.
    - JAlexoid 5y ago
      Oh.... Cool! So I'll give you $200k as a gift and you gift me your house "as a gift" ;)

abstractbarista 5y ago

I think that's good and correct. The inheritor hasn't had any capital gain. Because the deceased never sold, they didn't either.

singron 5y ago
If the inheritor somehow has no capital gain, shouldn't the entire basis be taxed as income instead? E.g. if I win a car in a contest or get paid in stock for working, I have to pay income tax on the current value when I receive it.

nullc 5y ago

>The step up basis is insane. Basis step up is extremely pragmatic, because it can be extremely difficult to establish the cost basis of a dead persons assets. It's offset by the estate tax -- change your figures to $20 million and the situation is substantially equalized.