Title

Carryover Basis: An Observation, an Irony, and a Proposal

Document Type

Article

Publication Date

5-8-1978

ISSN

1048-3306

Publisher

Tax Analysts

Language

en-US

Abstract

Alan L. Feld is a Boston University Law School professor and visiting professor at the University of Pennsylvania Law School. In this article Feld describes the changes in the treatment of capital gains transferred at death that were enacted in the Tax Reform Act of 1976. Feld notes that tax reformers would have preferred to tax capital gains at death but accepted the carryover basis provision as a second-best solution.

He reports that in the case of the very largest estates, the combined, effect of carryover basis and the lower estate tax rates results at most in a total estate and income tax liability much the same as that imposed under the old estate tax. Carryover basis and the lower estate tax rates will ordinarily reduce the death tax on largest estates.

Feld proposes allowing executors to elect a tax, at, say eight percent, on the value of the capital assets. The tax would be paid by the estate and the heirs would get a step-up in basis.

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