Inflation-adjusted basis and capital gains tax allow the taxpayer to take the current value of an asset as its basis for capital gains tax purposes. This is often referred to as “step-up in basis” or “step-up in cost”. The donor of the asset gets a step-up too, but they don’t pay any capital gains tax on their donation.
The step-up in basis is a provision in the United States tax law that permits an individual to increase the basis of any property, including stocks and bonds, without incurring capital gains tax. This change was implemented by President Trump to make sure that the rich don’t take advantage of this loophole. Step-ups can occur either when an individual dies or sells the property for more than its adjusted basis. A taxable event occurs when an individual sells their assets for less than their adjusted basis so they automatically incur taxes on any increased value above what they originally paid. The reason for this is because the person is not allowed to purchase any other property with cash other than his/her house, cars, and investments without paying taxes on it.
It would also have a big impact on estates with a lot of illiquid assets like real estate. Even if the asset is not sold by the beneficiary, there is a proposal that would apply a capital gains tax. This could force heirs to sell their inherited family property, liquidate inherited requirement accounts, and even have a significant impact on corporate assets.
If you are looking for an experienced law firm that will provide you with the right advice, contact Roman Aminov Law Office today.
Law Offices Of Roman Aminov, 1600 Ave. M, Brooklyn, NY 11230, (347)76 62682