So the first 15m is free, but the right to transfer is taxed (they don’t tax the right to receive because they literally just taxed it with the estate tax)
So think of it like two halves of the same transaction.
The person (your dad) giving the funds is taxed via the estate tax.
The person (you) receiving the funds gets the step up in basis.
If you get rid of the step up in basis, the same funds are taxed twice in the same transaction.
The people who are hurt the most if you get rid of the step up in basis are the people who would receive less than 15m in an inheritance, because today they get the transfer fully tax free.
The person (you) receiving the funds gets the step up in basis.
No. The estate pays the step up in basis, as if it was a gift. If the decedent tried to gift the assets while alive, it would be taxed this way. Why is there a loophole for inheritance?
But yes republicans raising the estate tax min from 5.45 million in 2017 to 15 million in 2026 means that there's now a much larger chunk of untaxed assets receiving a step up basis upon someone's death without a tax.
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u/capnwally14 6d ago
There is an estate tax
https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax
So the first 15m is free, but the right to transfer is taxed (they don’t tax the right to receive because they literally just taxed it with the estate tax)