Paul L. Caron

Tuesday, October 11, 2016

Zelenak Presents Tax-Free Basis Step-Up At Death And The Charitable Deduction Of Unrealized Appreciation Today At Columbia

Zelenak (2016)Lawrence Zelenak (Duke) presents The Tax-Free Basis Step-Up at Death, the Charitable Deduction for Unrealized Appreciation, and the Persistence of Error at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

This essay recounts, as a study in the remarkable persistence of some early errors even when the errors were promptly recognized and addressed, the legislative and administrative histories of the tax-free basis step-up at death and the charitable deduction for unrealized appreciation.

Part I describes the early development of the basis rules for property transferred by gift or bequest, and Part II covers the early history of the charitable deduction for appreciated property. Parts III and IV are concerned with less ancient events. Part III recounts the short unhappy life of the 1976 carryover basis reform, and Part IV does the same for the 1986 AMT reform.

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I would love to see a study comparing the lost revenue due to the step up in basis to actual estate taxes. My guess is the basis step up costs far more than the revenue generated simply because there are many more step up cases than estate returns.

Posted by: Dale Spradling | Oct 12, 2016 7:47:43 AM