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You die without ever selling your stocks. Your heirs can pay off your loans by selling some of the stocks they inherit. Their cost basis for those stocks is the

You die without ever selling your stocks. Your heirs can pay off your loans by selling some of the stocks they inherit. Their cost basis for those stocks is their value at the time of inheritance. This way no capital gains tax is ever due on the stock gains made in your lifetime.

djrogers 5y ago
At the amounts you're talking about (100s of millions of $$), virtually all of that stock would be subject to the federal estate tax, with the vast majority of it at the 40% top rate. Those unrealized gains you're talking about are one of the main reasons the estate tax was enacted ~100yrs ago...
- robotresearcher 5y ago
  Yes, in practice there are more tax sidesteps via foundations, etc. But the step that wipes the capital gains liability is as described.
snowwrestler 5y ago
Sure but Bezos’ heirs will certainly blast past the exemption on the estate tax, which exists specifically as a backstop against this type of situation. They will pay taxes on most of what they inherit.
- bluedevil2k 5y ago
  That’s what trusts are for! To avoid the estate tax.
d110af5ccf 5y ago
> Their cost basis for those stocks is their value at the time of inheritance. This way no capital gains tax is ever due on the stock gains Are you sure that's the way it works in the US? If so that seems somewhat absurd. In Canada there's no inheritance tax but capital gains are realized on death and the cost basis resets. So your heirs inherit the assets and an associated tax bill which honestly makes perfect sense to me (at least for things like stocks).
- robotresearcher 5y ago
  yep. https://taxfoundation.org/tax-basics/step-up-in-basis/ https://taxfoundation.org/tax-basics/step-up-in-basis/ https://www.investopedia.com/ask/answers/073115/how-cost-basis-calculated-inherited-asset.asp https://www.investopedia.com/ask/answers/073115/how-cost-bas...

djrogers 5y ago

At the amounts you're talking about (100s of millions of $$), virtually all of that stock would be subject to the federal estate tax, with the vast majority of it at the 40% top rate. Those unrealized gains you're talking about are one of the main reasons the estate tax was enacted ~100yrs ago...

robotresearcher 5y ago
Yes, in practice there are more tax sidesteps via foundations, etc. But the step that wipes the capital gains liability is as described.

snowwrestler 5y ago

Sure but Bezos’ heirs will certainly blast past the exemption on the estate tax, which exists specifically as a backstop against this type of situation. They will pay taxes on most of what they inherit.

bluedevil2k 5y ago
That’s what trusts are for! To avoid the estate tax.

d110af5ccf 5y ago

> Their cost basis for those stocks is their value at the time of inheritance. This way no capital gains tax is ever due on the stock gains Are you sure that's the way it works in the US? If so that seems somewhat absurd. In Canada there's no inheritance tax but capital gains are realized on death and the cost basis resets. So your heirs inherit the assets and an associated tax bill which honestly makes perfect sense to me (at least for things like stocks).

robotresearcher 5y ago
yep. https://taxfoundation.org/tax-basics/step-up-in-basis/ https://taxfoundation.org/tax-basics/step-up-in-basis/ https://www.investopedia.com/ask/answers/073115/how-cost-basis-calculated-inherited-asset.asp https://www.investopedia.com/ask/answers/073115/how-cost-bas...