Under current law, capital gains are generally taxed when an asset is sold and the seller has cash to pay the tax liability. For inherited assets, the basis is “stepped up” to the current fair market value (FMV). Large transfers of wealth are subject to the estate tax, which is currently 40 percent on amounts over $11.7 million for couples. An Ernst & Young study found that repeal of stepped-up basis would reduce wages by $32 for every $100 in new taxes collected and eliminate 80,000 jobs per year. ICSC believes that stepped-up basis must continue to apply to family-owned businesses, particularly when the gains relate to highly illiquid assets like real estate, where the burden of the tax otherwise could force the dismantling of a family’s livelihood.
Find news coverage relating to Stepped-Up Basis below: