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> If you aren't, then what you notice is that somehow this death has created a situation where the government never got it's cut of that (B-A) difference, so th
by necovek 5y ago
> If you aren't, then what you notice is that somehow this death has created a situation where the government never got it's cut of that (B-A) difference, so this is avoiding taxes.
While capital was transferred, value increase was never really monetized. Would it not be fair to say that it will be taxed only once it turns into money, against the B-A gains, and A is taxed according to normal inheritance rates.
Of course, this has a huge practical issue of knowing what A was, which could be a while back.
- torstenvl 5y ago> this has a huge practical issue of knowing what A was, which could be a while back So why not put the burden of establishing a basis (A) on the person seeking to claim its benefit — who, in this case, is also best-positioned to gather such evidence? Should they keep poor records, they lose the benefit of that basis, and will instead pay taxes on (B-0).
- mandevil 5y agoTaxing the B-A gains when they are sold, even after death, is what people mean by "eliminating the stepped-up basis" as the original poster suggested doing. At present, when a heir inherits at B they pay estate tax at B, but then if they sell at price C they only pay tax on (C-B). As for knowing what A is, if you don't know it you can always fill in 0 and pay slightly more tax than you should, to be safe, so you don't caught in an audit. As of 2011 the IRS requires all brokers to track and report the cost basis for all purchases- that is, any purchase made after 2011 when you sell it they will tell you and the government what the value of A should be.