--- In [email protected], "shempmcgurk" <[EMAIL PROTECTED]> wrote: > > Few people are aware that any suggestion for the elimination of the > estate tax comes with the elimination of the stepped-up basis for > capital gains. Currently, all capital gains get "stepped-up" of > their cost basis to market value on the day of death...so when your > heirs inherit an asset of your's with a capital gain the cost basis > on it is considered the market value on the day of death...in other > words, ZERO capital gains. > > With the elimination of the estate tax (as the law currently calls > for in the year 2010...and JUST the year 2010...it comes back in > 2011) is the elimination of the stepped-up basis....so the > government gives with one hand and takes with the other. > > So if and when the government eliminates the estate tax don't scream > that it is a give-away for the rich because the rich very well may > end up paying MORE on death than if there was an estate tax... > > By the way, that is the way it is in socialist Canada: there is no > estate tax but there IS a capital gains tax on death.
Shemp, While its a good point you raise about the (partial) take back due to loss of stepped-up basis, I am unable to construct an example where an heir would pay more taxes with an original basis and a 15% capital gains tax vs an inheritance tax of ~35-46% on a stepped up basis. Can you provide one. For example using current limits, if origianl basis in a house is 300k and is sold by the estate for 1,300K (not unusual in todays inflated RE market) then heirs would be subject to 15% x 1Mil capital gain = $150k. (Unless the house had been placed in an irrevocable trust prior to the "willer's" death. If so, then as I understand it, the basis is stepped up, and is under the estate tax limit, thus no tax on the house is due.) In contrast, if no estate tax exepemtion were in place, the heirs would owe 35%+ on the 1.3 mil = ~450k. Much more than the $150 with the stepped up basis and estate tax limitations. Can you clarify when and how an heir would pay more taxes with an original basis and a 15% capital gains tax vs an inheritance tax of ~35-46% on a stepped up basis? Thanks. ------------------------ Yahoo! Groups Sponsor --------------------~--> Something is new at Yahoo! Groups. Check out the enhanced email design. http://us.click.yahoo.com/SISQkA/gOaOAA/yQLSAA/UlWolB/TM --------------------------------------------------------------------~-> To subscribe, send a message to: [EMAIL PROTECTED] Or go to: http://groups.yahoo.com/group/FairfieldLife/ and click 'Join This Group!' Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/FairfieldLife/ <*> To unsubscribe from this group, send an email to: [EMAIL PROTECTED] <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
