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S MN | Maybe a possible solution would be eliminate the "step up in basis", but revalue the asset with an inflation adjusted calculation. If an asset was purchased/acquired in 1965 for 200/acre - what is that in 2021 dollars? Hypothetically say $3000... So now the new owner's basis is 3000 in inflation adjusted dollars. If asset is sold in 2021 for more than the inflation adjusted dollars, then it triggers capital gain. Similarly, if he holds the asset for 5 years and then sells- using an inflation adjusted calculation maybe his "basis" is now 3200- so selling for over that triggers a capital gain...
Step up in basis appears to have been an attempt to adjust for inflation at the time of death, but the unintended consequence is that assets get held until death for that very reason. If there was an inflation adjusted basis, assets could be transferred much sooner if desired- as there would be little difference in taxable gain if the asset were sold at say retirement age or held until passing. Maybe that would be just a whole new can of worms | |
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Stepped up basis... again
