Posted on 11/04/2004 9:32:48 AM PST by ncfool
Where I live (Indiana) many small farms cease to exist when the owner dies, since many heirs cannot afford to pay the taxes on the place.
It's a sad state of affairs.
A good point, re: capital gains taking over for estate taxes. Of course capital gains rates are low and maybe could be lowered by this administration? But the other thing is that these gains can be postponed until the item is sold. In the casre of farms, this might be a long time. It does make for problems among siblings who need to split an estate.
Many, many farms have been sold to developers to pay the death tax even though the family desperately wants to keep it. I always wondered why environmentalists never got behind this...""
Don't kid yourself that the enviros like farming and ranching. They love breaking up ranches and farms.
Go to google and look for Range Magazine out of Carson City Nev for lots more on this topic.
The estate tax is bad. The fact that the government could come up with something just as bad, or worse, does not change the fact that the estate tax is bad morals and bad economics.
From an accounting standpoint, a step-up in basis - that is to say, a new basis - is standard when there's a change of ownership. It's not something you have to pay tax on unless you sell the asset. Eliminate the capital gains tax, anyway :-).
There is a step-up in basis at change of ownership only if it is a transfer for value. Here, we are talking about gifts, which do not get a step-up, whether the gifts are lifetime or transfers at death.
In 1988, there was a short period when the IRS tried the concept of carry-over basis at death (rather than the current step-up). It was such an immediate, horrendous mess, that the law was repealed RETRO-ACTIVELY within the first year.
The estate tax is bad-- bad policy, double taxation, onerous, and confiscatory. But, carry-over basis is a pandora's box. Granted it does not raise its ugly head until a sale or transfer for value (such as when an estate is divided among beneficiaries). As more years go by, the likelihood of having correct accounting records to establish basis goes down.
Trading one bad tax for another can't be a good solution.
DUH--hurry up and die. I'm smoking, drinking, and driving like a Korean--especially in RAT-infested neighborhoods.
You're right about that! And we shouldn't have to. We should be able to eliminate a bad tax, and then we'd find that the stimulus to the economy would produce more than enough revenue from other sources to offset the revenue "loss." Just think of all the estate planners who could go get real jobs!
Do you know what a "Family Limited Partnership" is?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.