4 ms·

How are stock-backed-loans paid back? If in cash, they have to get the cash from somewhere, right? Supposedly selling the stocks. That can be taxed then and th

How are stock-backed-loans paid back? If in cash, they have to get the cash from somewhere, right? Supposedly selling the stocks. That can be taxed then and there. If they transfer the stocks to the lender, that means the stocks in question are valued at $x, since that's the value of the loan. So tax that value.

brianwawok 4y ago
After you die your estate sells stocks
- matthewdgreen 4y ago
  Does the estate pay capital gains on those stocks, or can it take advantage of stepped-up cost basis rules to avoid those as well?
  - ti00 4y ago
    I'm not an expert, but my reading of the IRS's FAQ [1] is that the cost basis of inherited assets gets reset to the fair market value of the assets on the date of death. 1. https://www.irs.gov/faqs/interest-dividends-other-types-of-income/gifts-inheritances/gifts-inheritances https://www.irs.gov/faqs/interest-dividends-other-types-of-i...
    - WalterBright 4y ago
      You're right, and then you pay the inheritance tax which is more than the capital gains taxes would have been.
      - dragonwriter 4y ago
        > > And then you pay the 40% federal inheritance tax and the 20% state inheritance tax on the total value at the date of death. After the $12 million (nearly $13 million next year) exemption, the unused portion of which passes to the surviving spouse and increases their tax-free estate exemption. But, yes, in the limit case estates aren't the tax-optimal way to transfer capital to survivors, which is why other vehicles are used for people for whom the estate exemption is small potatoes.
        WalterBright 4y ago
        If you're a billionaire, a $12m exemption isn't much of anything.
        dragonwriter 4y ago
        “But, yes, in the limit case estates aren't the tax-optimal way to transfer capital to survivors, which is why other vehicles are used for people for whom the estate exemption is small potatoes.”
        WalterBright 4y ago
        Like what?
        kasey_junk 4y ago
        GRAT’s are common for volatile assets like tech shares.
  - WalterBright 4y ago
    The estate gets a stepped up cost basis on the date of death. And then you pay the 40% federal inheritance tax and the 20% state inheritance tax on the total value at the date of death.

brianwawok 4y ago

After you die your estate sells stocks

matthewdgreen 4y ago
Does the estate pay capital gains on those stocks, or can it take advantage of stepped-up cost basis rules to avoid those as well?
- ti00 4y ago
  I'm not an expert, but my reading of the IRS's FAQ [1] is that the cost basis of inherited assets gets reset to the fair market value of the assets on the date of death. 1. https://www.irs.gov/faqs/interest-dividends-other-types-of-income/gifts-inheritances/gifts-inheritances https://www.irs.gov/faqs/interest-dividends-other-types-of-i...
  - WalterBright 4y ago
    You're right, and then you pay the inheritance tax which is more than the capital gains taxes would have been.
    - dragonwriter 4y ago
      > > And then you pay the 40% federal inheritance tax and the 20% state inheritance tax on the total value at the date of death. After the $12 million (nearly $13 million next year) exemption, the unused portion of which passes to the surviving spouse and increases their tax-free estate exemption. But, yes, in the limit case estates aren't the tax-optimal way to transfer capital to survivors, which is why other vehicles are used for people for whom the estate exemption is small potatoes.
      - WalterBright 4y ago
        If you're a billionaire, a $12m exemption isn't much of anything.
        dragonwriter 4y ago
        “But, yes, in the limit case estates aren't the tax-optimal way to transfer capital to survivors, which is why other vehicles are used for people for whom the estate exemption is small potatoes.”
        WalterBright 4y ago
        Like what?
        kasey_junk 4y ago
        GRAT’s are common for volatile assets like tech shares.
- WalterBright 4y ago
  The estate gets a stepped up cost basis on the date of death. And then you pay the 40% federal inheritance tax and the 20% state inheritance tax on the total value at the date of death.