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I think they defer as much as they can until they die and their heirs get to inherit with a stepped up cost basis and they never pay tax. Borrow, buy, die. If
by donmcronald 4y ago
I think they defer as much as they can until they die and their heirs get to inherit with a stepped up cost basis and they never pay tax. Borrow, buy, die.
If they’re really crafty, the heirs will overvalue assets when stepping up the cost basis so they can actually claim losses in the future.
From Wikipedia:
“The tax code of the United States holds that when a person (the beneficiary) receives an asset from a giver (the benefactor) after the benefactor dies, the asset receives a stepped-up basis, which is its market value at the time the benefactor dies (Internal Revenue Code § 1014(a)).”
- actually_a_dog 4y agoLet's not forget how the US just conveniently doesn't go after the wealthy for tax fraud, because it's too difficult given they can hire armies of CPAs and lawyers to defend themselves.
- berberous 4y agoThe US does go after the wealth for tax fraud. I think the bigger issue is that the wealth pre-emptively hire CPAs/lawyers to take maximum advantage of tax rules in a way that may not be prohibited, innovating faster than legislators can act.
- actually_a_dog 4y agoIRS Audits Few Millionaires But Targeted Many Low-Income Families in FY 2022: https://trac.syr.edu/reports/706/ https://trac.syr.edu/reports/706/
- berberous 4y agoThe IRS may be underfunded, but it's misleading to say the IRS does not go after the wealthy for tax fraud. The chart in that article shows $1M+ earners to have the highest audit rate, albeit some of it correspondence audit, and says 25% of audit man hours are spent on millionaires.