FACTS:
Many see the “step-up in basis at death” rule as an expensive tax loophole enjoyed by the wealthy. Life is about “death and taxes”, isn’t it?
Do some research about the step-up basis rule.
Should the law be repealed? Share your thoughts on this controversial tax topic. With the step-up basis rule, discuss the planning opportunity for wealthy families (and maybe for you and your family too).
If possible, find the latest estimates of the revenue loss that is attributable to this rule.
A word of caution:
When doing research, you must locate appropriate authorities that relates to the issue/topic. Authority comes from many sources, including tax code, the courts, and the IRS. Make sure you provide the source.
Below is an interesting case related to the step-up basis rule:
The taxpayer, a CPA and retired partner of KPMG, LLP, gave shares of stock, in which he had zero basis, to his nonresident alien spouse. Soon thereafter, the shares were sold. On his tax return for that year, the taxpayer originally reported the sale as a long-term gain but with zero basis for the shares given to his wife. The taxpayer later amended his income tax return taking the position that his wife received a stepped-up basis of nearly $620,000 in the shares. The IRS disallowed the basis in the shares and assessed a 40% valuation misstatement penalty. The Tax Court agreed, holding that the taxpayer should have known that he couldn't claim a stepped-up basis for the gifted shares. Ian D. Hughes, TC Memo 2015-89 (Tax Ct.)
Feel free to have your comments on the case.
Instructions:
At the minimum, you should:
Answer all questions.
Write atleast 350 words to support your answer