Re-assessing the Costs of the Stepped-up Tax Basis Rule

Jay Soled (), Richard Schmalbeck () and James Alm ()
Additional contact information
Jay Soled: Rutgers Business School
Richard Schmalbeck: Duke Law School

No 1904, Working Papers from Tulane University, Department of Economics

Abstract: The stepped-up basis rule applicable at death (IRC section 1014) has always been a major source of revenue loss. Now, in the absence of a meaningful estate tax regime, taxpayers and their estate executors and administrators are likely to report inflated date-of-death asset values. As a result, the revenue loss associated with this tax expenditure, called the “stepped-up tax basis rule”, will surely increase markedly. The Internal Revenue Service will no doubt attempt to police excessive tax basis adjustments, but the agency lacks the resources to do so adequately. Congress should therefore institute reforms to ensure proper tax basis identification.

Keywords: Estate tax; capital gains; stepped-up basis tax rule. (search for similar items in EconPapers)
JEL-codes: H2 H3 (search for similar items in EconPapers)
Date: 2019-04
New Economics Papers: this item is included in nep-ore, nep-pbe and nep-pub
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