STEP UP IN BASIS AT DEATH MAY LIVE ON, BUT COULD COME WITH A TAX BILL

The Biden Plan:

• At death, the inherited asset would be deemed to have been sold with gain or loss being reported on the decedent’s final return.
• The heirs would get the basis reported as the selling price on the decedent’s final return.
• Gains of less than $1 million would not be taxed.
• Gains on residences would still get the $250,000 or $500,000 gain exclusion.
• Family farms and businesses would be exempt if heirs operate the farm or business.

Democratic Senate Plan (The STEP Act):

• At death, the inherited asset would be deemed to have been sold with gain or loss being reported on the decedent’s final return.
• The heirs would get the basis reported as the selling price on the decedent’s final return.
• Gains of less than $1 million would not be taxed.
• Gains on residences would still get the $250,000 or $500,000 gain exclusion.
• Would treat transfers made as a gift, bequest or to certain trusts as sales.
• 15-year tax payout for certain assets.
• Special rules to prevent tax dodges though trusts.

While the proposals are similar, the STEP Act is broader and more far reaching.

Stay tuned for further death-defying legislation!