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Therefore, if the taxpayer's sister were to sell the house for $100,000, she would not have to pay any income tax because the sales price ($100,000) minus her stepped-up basis ($100,000) would be a capital-gain income of zero. See the explanation under "Rationale for stepped-up basis" (below) for an explanation of why the Tax Code would do this.
Tax basis of property received by a U.S. person by gift is the donor's tax basis of the property. If the fair market value of the property exceeded this tax basis and the donor paid gift tax, the tax basis is increased by the gift tax. This adjustment applies only if the recipient sells the property at a gain. [7]
Under the stepped-up basis rule, [8] for an individual who inherits a capital asset, the cost basis is "stepped up" to its fair market value of the property at the time of the inheritance. When eventually sold, the capital gain or loss is only the difference in value from this stepped-up basis.
TRAs are now a common feature of IPOs structured as an Up-C. [4] Up-C IPOs are designed to generate basis step-ups that allow a company to benefit from substantial tax deductions. [5] TRAs are typically drafted to require that the newly public company share 85% of the tax benefits it receives from these basis step-ups with its pre-IPO owners.
The estate tax was reinstated in 2011 with a further increased cap of $5 million for individuals and $10 million for couples filing jointly and a reduced rate of 35%. The "step-up basis" of estate tax law allows a recipient of an estate or portion of an estate to have a tax basis in the property equal to the market value of the property.
3. Harris wants to scale up tax credits for families and first-time homebuyers, while Trump wants to create new tax breaks. Trump’s Tax Cuts and Jobs Act expanded the child tax credit (CTC) for ...
Basis (or cost basis), as used in United States tax law, is the original cost of property, adjusted for factors such as depreciation. When a property is sold, the taxpayer pays/(saves) taxes on a capital gain /(loss) that equals the amount realized on the sale minus the sold property's basis.
A like-kind exchange under United States tax law, also known as a 1031 exchange, is a transaction or series of transactions that allows for the disposal of an asset and the acquisition of another replacement asset without generating a current tax liability from the sale of the first asset. A like-kind exchange can involve the exchange of one ...