Elimination of Stepped-Up Basis a Threat to Future Generations of Family Farmers

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[Right Wing Vegan]

Like many other farmers and ranchers, Tennessean Mike Brundige is worried a proposed change in tax policy will keep him from passing the family’s farmland on to his children and grandchildren.

Brundige farms with his two sons in Weakley County, in the northwestern part of the state. They represent the fourth and fifth generation, respectively, to farm that land. Brundige is counting on there being many more generations to follow.

“Our main goal is to keep the land in the family in hopes that it will continue to prosper and grow enough that any other future family members would have the opportunity to participate,” he said.

However, a proposal to eliminate stepped-up basis has Brundige and other farmers and ranchers worried their children and grandchildren will struggle too much with capital gains taxes to continue the family business.

Stepped-up basis allows a farmer to pay capital gains taxes only on the property’s increase in value since the land was inherited, not on the full increase in value since it was purchased by that farmer’s parents or grandparents.

Because the value of many farms is tied up in land and equipment, most farmers don’t have large amounts of money available to pay capital gains taxes. They could be forced to sell the farm or take out costly loans just to pay capital gains taxes. Even if a farmer only has to sell some of the land, that would limit the number of family members who join the operation.

As Brundige explained, his goal of keeping the land in the family won’t work if they have to sell off parcels of it.

He also noted that many people mistakenly think only the very wealthy get snagged by capital gains taxes, but it’s families like his who have spent a lifetime building farming, ranching and other small businesses who would be hit the hardest.

“The elimination of stepped-up basis would certainly lower the amount of assets that we were able to pass on to our children. There’s no reason to have them accountable for taxes that accrued on assets 40 or 50 years before,” Brundige said.

Farm Bureau is urging farmers and ranchers to tell Congress how critical stepped-up basis is to the continuation of their family businesses. Emails to representatives and senators can easily be sent from here.

[MeneMeneTekelUpharsin]

It is all part of the overall plan. When the Jews asked for a king, they screwed up. The government and their corporate minions are driving all of this. They continue to extend the eviction moratorium and I know of a family that sold their entire rental holdings to a big corporation (which can hold on for a long time). This has to be happening all over the country. Big companies are becoming the owners of everything that has real value while the masses become their slaves.

[Roccus]

I used to think that Congress was just ignorant of what they imposed on family farms and Mom & Pop business. Today I truly believe our governments - federal, state and local - are trying to exterminate them and the independence they represent.

[Tell It Right]

I've always wondered how the Dims can say they hate the rich who inherited their wealth through a "luck of the dice", while at the same time talking like family farms with millions of dollars worth of land are totally awesome dude.

Next they'll say they hate that too many women experience sexual assault, while at the same time forcing women to share locker rooms and restrooms with men.

[abbastanza]

It’s not just the stepped up basis, it’s also the reduction of the $22m Estate value exemption down to $1m (for husband and wife). So the value of an Estate over $1m is taxed at 39% plus 4.3% Obama Care Tax. Say you have a family farm worth $8m. The heirs would owe 43.3% of $7m in estate taxes; about $3m cash. This doesn’t just apply to farms, it applies to everyone who dies with assets over $1m.

[1Old Pro]

Biden wants to government to farm and control the food supply, communism.

[qwerty1234]

When the ultra-wealthy elites who want to pass down tax-free dynasty-like wealth that has never been taxed in the first place onto their heirs they always trot out these stories about ‘family farmers’ who will be effected.

We all know what that really means by now, don’t we?

[normbal]

#TaxationIsSlavery

[Pilsner]

I closed a real estate deal about twenty years ago, where a family farm was sold after the farmer parents had both passed, because the middle aged kids did not want to return to farm and run it. The title holder was a trust, which the parents had formed a few years before, and conveyed the farm to, and the kids were signing as joint trustees, not as heirs.

The eldest announced proudly that the trust was his doing. HE had talked his parents into it, and thus avoided the EXPENSE of probate for the heirs!

I acknowledged that he had certainly avoided the expense of probate. Unless, of course, there were significant assets which had either been left out of, or purchased after the creation of, the trust. There were. So wills must be probated after all.

I then pointed out that because the farm passed via the trust, and not by wills, the heirs would pay capital gains tax on the entire increase in value, from a two digit a four digit price per acre, from the day Daddy purchased the land when he got back from WWII, to the day of sale. While if the farm had passed via wills, they would have paid capital gains tax only on the increase in value between the day Momma died, and the day of sale, a six figure number.

The emotions that played across the face of eldest son, and his siblings, were interesting.

[bobbo666]

If it looks like changed taxation will hurt your farm, you have seen the goal.
Small businesses (and a farm is) are run by those who assess risks. Those folks are usually conservative. This makes you a political target. And, that is the goal, to target and destroy you. That is also the purpose of shutdowns, to kill off conservatives.

[PapaBear3625]

The ultra-wealthy stash their wealth into “non profit foundations”, like the Clinton Foundation, the “Bill and Melinda Gates Foundation”, all the way back to the “Rockefeller Foundation”.

You REALLY want to narrow the deficit? declare that all investment income of all “non-profits” get taxed at the full corporate rate.

[qwerty1234]

I used to defend the wealthy amassing untold billions of dollars as the ‘amercian way’ - until they all turned into woke a-holes, now I want to tax the hell out of them.

The middle class folks, and even upper middle class folks are being played for fools by a few thousand uber-wealthy elites who control the country and claim its the ‘family farmers’ they are looking to protect.

Perfectly happy to have the IRS sieze all of the wealth of zuckerberg, bezos, gates, buffet and just about all of the rest of these woke idiots. Tax away.

[Alberta's Child]

The U.S. tax code has had an estate tax exemption for family farms — and maybe other small businesses, too — since the 1990s. The one condition that has to be met is that the next generation of the family must continue to operate the business.

Even if they eliminate this “step-up in basis” provision, there are plenty of ways to protect the family business with some good planning and sound financial advice.

I am familiar with a number of situations where family businesses were destroyed as a result of capital gains and/or estate tax issues. In almost every case, the family business was run by morons.

[gloryblaze]

Could the trust not have been set up to receive the stepped up value, then sell and disburse the sale proceeds to the kids without any gain?

[minnesota_bound]

We know from reports this year that very rich like Gates and Buffett thru their foundations pay less then 1% tax.
Tax them at the very highest rate and see if they complain.

[Organic Panic]

Commie corporatism. Bill Gates, ADM, Blackstone, Bezos... THEY have plenty of money to buy your land from your kids once it hits the auction block.