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Yep, you've got it. The most beautiful part of the whole thing is the step up in basis for the estate. When you pass on your estate, the cost basis of all your
by darawk 5y ago
Yep, you've got it. The most beautiful part of the whole thing is the step up in basis for the estate. When you pass on your estate, the cost basis of all your assets get "stepped up" to the current market value. This means that if he passes on his estate to his children, they can then sell the shares to repay the loan with zero tax.
All this adds up to zero capital gains taxes being paid ever on the entire amount.
- ant6n 5y agoHow does the "step up" of the cost basis happen with paying any taxes at the same time?
- darawk 5y agoI'm not sure I understand the question. The assets in your estate get their cost basis reset to the current market value when your estate is passed on. That means the capital gains in his shares disappear. That being said, the estate tax would kick in for everything over 11m, so he'd have to use other tricks to work around that limitation.
- ant6n 5y agoThere was a typo, with->without