Let me see if I understand this. Let’s say person A buys one share for $10. A few years go by and that person dies. At the time of death, the share is worth $20. Person B inherits that one share. That person can sell that share for $20 and not pay a tax?
Yuuuuuuuuuup
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Right, because taxing that stock sale would be the most unfair thing in the universe.
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Does this shit still apply if, rather than one share of a $10 to $20 stock, there are two million shares?
That person can sell those for $40 million and not pay anything?
I think it’s up to $23 million worth of stock to pay truly nothing. Above that, you’ll owe inheritance tax, but you won’t pay any capital gains on an immediate sale. See why Riverman in RiverMAD about this?
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I dont understand how that policy isnt hammered whenever how do we pay for it surfaces. Just have a standalone bill ready that repeals it in the House and call for a vote whenever a speech references the deficit.
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Once you’re talking 40 million worth of stock, there are probably (separate) estate tax considerations, but as far as the person who inherits the stock is concerned, they still get the step up in basis, no matter how many shares you inherit (there’s no phase out).
Eta: my pony’s heirs are currently enjoying a stepped up basis…
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If you really want to get mad learn about rolling GRATs, generation skipping trusts, dynasty trusts, NING trusts, donor advised funds, life insurance trusts (remember, life insurance proceeds are tax free), and 100 other vehicles to avoid the estate tax.
And don’t forget, a couple can give $30k a year to infinity people without anyone paying tax. So someone who is 50 and rich with 4 kids who dies at 85 can move roughly $4 million out of their estate this way.
I don’t have a problem with that if the stonks are subject to inheritance tax. When you buy a stonk, you don’t have to pay cap gains on what the guy you bought from made.
I realize now one here cares it’s possible to pay more tax than the stonk is worth if there is a large percentage increase, but I care a little
I’m curious how that works.
Stock has a basis of $1MM, valued at $10MM at time of death. Exempt the $10MM from estate tax but require cap gains tax true up seems pretty fair to me. Even without the philosophical discussion of how much we should incentivize passing on generational wealth.
I retract that. With 20% cap gains and 50% inheritance, max tax rate with infinite gain is 70%. I also wrote that because it’s the first calculus problem I solved in 15 years.
Calculus is over-rated. Last integral I solved I did it two ways and didn’t get so much as a thank you.
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Honestly, 70% seems about right in for “inherited property over $23 million.” I think its actually 60% though, estate tax is 40%, though some states have separate additional estate taxes.
This is a major part of the Mary Trump book. Detailing the massive tax scheme by Fred Trump to hide his assets by putting them in the names of his children and grandchildren, except they never got the money or proceeds because Fred was such a psychopath and it was all about keeping the money for himself.
So when Fred Trump Jr. died all that stuff in his name should have gone to Mary, except suddenly his family turned on him and said he was broke so Donald and his siblings could split up the $200,000,000 his Fred Jr’s family was owed or whatever.
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ed this because I think it’s a calculus joke even though I don’t understand it.
I thought Gifts came out of the allowance, so every 30K you give gets knocked off the 26M (or whatever it is) when you die. Is that not right?
It’s not a joke. 100% true and earnest.
This is a calculus joke:
https://twitter.com/stevenstrogatz/status/1369410140215144453?s=09
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The first $15k per year per recipient doesn’t count against the donor’s lifetime exemption. It is also not taxable to the recipient.
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