Carryover Basis Revisited

In Marc S. Bekerman (Partner, Fleischman & Bekerman LLP, New York, NY) & William P. LaPiana (Rita and Joseph Solomon  Professor of Wills, Trusts, and Estates, New York Law School), Carryover Basis? Have We Learned From History?, Prob. & Prop., Nov./Dec. 2005, at 38, the authors “analyze the modified carryover basis system contained in Code § 1022, identify problems that may require legislative or administrative solutions, and present suggestions in planning for such a system.”

Bekerman and LaPiana conclude that:

The step-up in basis on property acquired from a decedent under Code § 1014 is likely tied directly to the future of the estate tax.  Because many forces are leading towards the repeal of the estate tax, one must anticipate that the step-up in basis currently permitted under Code § 1014 is also in jeopardy.  Although a pure carryover basis has already been dismissed implicitly, both by the retroactive repeal of the previous attempt to impose such a system and the enactment of Code § 1022(b), which permits a modified system allowing a certain amount of basis adjustments, estate planners must begin to consider drafting for carryover basis.