Tax Tips - The $52 Billion Tax Saver
Monday, April 14, 2008
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The tax deadline is nearly here, and NBR's tax guru Kevin McCormally of Kiplinger's Personal Finance only has a couple tips left. Tonight, he says many taxpayers could save money by stepping up the basis on assets they inherit.
Examples
In tonight's tip, Kevin presents two examples to illustrate his point about stepping up the tax basis. Those examples are summarized below.
| Step-Up Tax Basis Example 1 |
Uncle Joe's original investment = $10,000 |
Your inheritance = $100,000 |
Your tax basis if you sell = $100,000 |
*You only owe tax if you sell for more than $100,000 |
| Step-Up Tax Basis Example 2 |
Joe & Mary's original investment = $10,000 |
Value of investment on Joe's death = $100,000 |
Mary's tax basis = $55,000 |
*Mary's tax basis is half the original investment plus the value of Joe's half of the investment on his death. |
Editor's Note: The calculation of Mary's tax basis in Example 2 has been corrected. It was incorrectly reported in the originally broadcast Tax Tip.
Want more Tax Tips?
External Links/Articles*
- Form 1040X (PDF)
This is the Internal Revenue Service's "Amended U.S. Individual Income Tax Return," which Kevin McCormally mentions in his Tax Tip. - Internal Revenue Service (IRS) - Gifts & Inheritances
This is the section of the IRS website that offers information about taxes on Gifts & Inheritances.
*Clicking these external links will take you off the NBR web site on PBS.org. NBR has no affiliation with these sites.
