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The step up basis rule applies to the estate and it is stepped up to the current value on the date of death. So the estate settles the debt and pays no capital
by jjeaff 4y ago
The step up basis rule applies to the estate and it is stepped up to the current value on the date of death. So the estate settles the debt and pays no capital gains tax on any assets that had to be sold to pay off the debt. Then, the remaining assets go to the heirs. Or, if it is setup like most super wealthy, the assets left in the estate will more or less be cancelled out leaving little in the estate thus avoiding estate tax. Most of the assets will have already been passed along or will remain in various trusts and non-profits for the benefit of the heirs.
- missedthecue 4y agoOnly counts for estates less than $11.2 million. Again, useful for the middles class. Meaningless if you're Bezos.
- jjeaff 4y agoNo, I don't believe there is a limit for the step up rule. You are thinking of the estate tax exemption. That is avoided through other loopholes.
- lesuorac 4y ago[Citation needed] Step-up cost basis is useless for a middle class estate because below $11.2M you don't pay an estate tax. [1] Propublica has done a lot of research of this which you should read. [2] [1]: https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act_of_2017#Estate_tax https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act_of_2017#... [2]: https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax https://www.propublica.org/article/the-secret-irs-files-trov...