Working Paper: NBER ID: w22090
Authors: Robert Gordon; David Joulfaian; James Poterba
Abstract: In 2010, the U.S. estate tax expired and executors of wealthy decedents were not required to file estate tax returns. In the absence of the estate tax, beneficiaries received assets with carryover rather than stepped-up basis. Unrealized capital gains accounted for 44 percent of the fair market value of non-cash assets in estates that chose the carryover basis regime, and an even higher percentage for some asset categories. Many of the largest gains were on assets that had been held for at least two decades.
Keywords: Basis Step-Up; Capital Gains Tax; Estate Tax; Voluntary Estate Tax Regime
JEL Codes: H24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| basis step-up provision (H24) | capital gains tax liabilities (H24) |
| basis step-up provision (H24) | tax burdens on unrealized gains (H24) |
| 2010 voluntary estate tax regime (H24) | estate tax filings (H24) |
| higher unrealized gains relative to estate value (D14) | probability of asset sale (G19) |
| probability of asset sale (G19) | capital gains tax burden (H22) |
| basis step-up provision (H24) | revenue implications (H27) |