Is Biden’s Wealth Tax Plan a Planning Opportunity?

Joe Biden has emerged as the current front runner for the Democratic presidential candidate, so it is about time to review his wealth tax proposal. The proposition could have a profound effect on the transfer of wealth for millions of Americans.

Under current federal law, when an individual dies, that person receives a “step-up” in income tax basis for assets to the date of death. The person that the assets is transferred to then receives the benefit of smaller tax burden with less capital gains. Biden’s proposal would be to eliminate this “step-up in basis” concept, and a taxpayer’s death would cause an income tax realization event which would cause capital gain tax (20%) to be due, whether or not the securities are sold or the person is otherwise subject to federal estate tax.

This alteration could devastate many American’s investment portfolios and how they plan to transfer investment properties to the next generation. But with current market values being depressed, capital gains could still be minimal. 

See Michael L. Mixell, Is Biden’s Wealth Tax Plan a Planning Opportunity?, Barley.com, April 15, 2020.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.