Democrats look to impose capital gains tax at death

[Yo_Mama_Been_Loggin]

Several Senate Democrats are pushing to boost federal revenue by taxing certain capital gains that are passed down after death.

Traditionally, unrealized capital gains have not been taxed, allowing wealthy individuals to transfer stocks, bonds and real estate investments to their children and grandchildren without the recipients being taxed.

Under current law, heirs don't have to pay tax on the capital gains that were accrued by an asset or investment before they received it. They only have to pay capital gains taxes on an inherited asset after they sell it, and they only have to do so for the amount the asset or investment appreciated after it came into their possession.

Democrats, led by Sens. Chris Van Hollen (D-Md.), say it's time for that to change.

Van Hollen has joined with Sens. Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Cory Booker (D-N.J.) and Sheldon Whitehouse (D-R.I.) to introduce a proposal to close what they call the "stepped-up basis loophole by taxing the unrealized capital gains of fortunes on which the original owner never paid income or capital gains taxes."

https://www.msn.com/en-us/news/politics/democrats-look-to-impose-capital-gains-tax-at-death/ar-BB1f6dCC?li=BBnbfcQ&ocid=DELLDHP

[LonePirate]

1. This needs to happen!!! Dems must include it in the next reconciliation bill.

[unblock]

2. This is a modest idea but harder for opponents to attack than the inheritance tax

Personally I prefer a high inheritance tax to cover it and the fact that inheritance is largely just a windfall and worse, it's not fair.

But at a minimum, letting people inherit money on which taxes haven't been paid is ludicrous.

[Yonnie3]

3. I guess I don't have to worry about my estate being taxed

The proposal would exempt $1 million in unrealized gains per individual or $2 million per couple from taxes.

Not by a long shot

[Demsrule86]

12. I wouldn't need to worry either...and all this worry about these folks...when if you sell your house

before two years you have to consider it income and lose your shirt thanks to the Orange POS's tax bill. And you lost your home office as well.

[Mary in S. Carolina]

4. Yes!!!

They should also include a 75% tax on all transfers at death, excluding $1,000,000 per beneficiary. The heirs did not earn this money; the transfer of assets at death is getting something for "free" (don't Republicans (MAGAts) accuse Democrats of "giving away money" and are Socialists). Let the heirs go to work like the rest of us and enjoy the fruits of "their" labor. Heirs with money = power without a skill set; America cannot afford heirs with money, we need the brightest and the best, not a bunch of rich folk that never earned their keep running our businesses or government.

[lostnfound]

9. That's too extreme. Family business or homes would have to be sold to pay for it

Stock assets or cash can be easily divided and sold, but a nice home in an expensive city or many small businesses are valued at more than a million.

[Freethinker65]

5. A fucking nightmare.

Property that was inherited at a stepped up basis will now be treated as capital gains? All records of improvements were discarded because the way such gains have been treated for years. Even stocks can be a nightmare if they were purchased decades ago, then inherited, then moved between brokerage houses, etc. People have not been keeping meticulous records of assets they knew would be inherited because their estates were under the former threshold. If you inherit a house and a bank account you must determine the cost basis with no real records because until the law changed you didn't need them!

Those with major estates will still find loopholes. Those with modest estates and some unspent IRAs and investments will end up scrambling to determine cost basis from the past. Say your parents house they purchased for 50K 50 years ago is now worth 600K. That is 550K of capital gains. Do you have the record for the bath remodel in 1985? The addition put on in 1992? The newer garage?
Do you know how much they paid for that initial Amazon or Apple stock they bought on a whim? When did they switch brokerages? How much is capital gains and how much was already taxed and reinvested?

Not a good idea.

Look. They already changed how Roth IRAs get distributed. Those that are inherited must now be withdrawn within ten years. If those that inherit the Roth IRAs are pre-retirement the money could lead to higher earned income brackets before they even want to tap into the money. This would be fine if those that invested in a Roth IRA knew the government could change the cost-benefits of the accounts on a whim. The whole idea of the Roth is that you paid the taxes for the money before investing it and it could be withdrawn tax free or inherited.

[Big Blue Marble]

6. I absolutely agree with you.

The elimination of the stepped up basis hurt many middle class heirs. In addition to the
issues you raise, there would be a penalty tax on inflation appreciation that occurs
with long held assets.

[Demsrule86]

10. This was specifically tailored to stocks with unrealized value...so I think it is a great idea.

Homes and farms would be subject to inheritance taxes if there are any these days.

[SharonAnn]

7. Yes, absolutely. Those gains were never taxed before death.

[Solomon]

8. Dumb idea. Estate/inheritance taxes are the trade-off for this.

[Demsrule86]

11. You can do both.

Even with inheritance taxes this would not have been taxed.