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Below is a clip from an article, "Four Ways to Beat State Death Taxes" in the Jan 28, 2013 Forbes Magazine, written by Ashlea Ebeling:

A few caveats about “gifting.” If you want to make sure the money is going to be used the way you want, use a trust instead of an outright gift. Don’t gift low-basis assets: if you paid $10,000 for stock and it’s worth $100,000 when you give it away, the recipient keeps your old $10,000 basis and would owe capital gains tax eventually when the stock is sold. By contrast, if you leave the same stock to the same person in your will, the recipient gets a stepped-up basis to the value as of your date of death, saving capital gains tax.

I have the impression that the "stepped-up basis" she cites above expired in 2012.

Comments addressing this posting are appreciated. Thanks.
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I have the impression that the "stepped-up basis" she cites above expired in 2012.

It did not expire in 2012.

There was a window of time during 2010 when the step up might not have applied.

--Peter
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I have the impression that the "stepped-up basis" she cites above expired in 2012.

It didn't. The rules went back to pre-Bush era provisions except a higher exlusion from estate tax.

Phil
Rule Your Retirement Home Fool
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Thanks, Peter and Phil.

Joe
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I have the impression that the "stepped-up basis" she cites above expired in 2012.

As others have already noted, not so.
But I question the premise in the quoted article, namely, "Don't gift low-basis assets." Maybe you want to, maybe you don't.

If the alternative is keep the assets until you die, as suggested, then yes, you'd rather keep the appreciated assets. But otherwise, if it's going to a trust, and you can plan that it will be held for a long time, maybe you don't care. If you're not going to sell, you don't care what the basis is.

The capital gains tax may be 15% or less for the recipient, and 20% or 23.8% for the donor. It makes sense to give the appreciated assets.
Maybe the gift is of a closely-held S-Corp., and you can move income as well as appreciation to lower-bracket family members (not so well if kiddie tax comes into play.)

That was too simplistic an assetion, IMNSHO.

Bill
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