In a hypothetical scenario, if Jill purchases a stock for $10 and dies when it is worth $50, her heir Jack inherits the stock at the $50 value. If Jack sells the stock for $55, he only pays capital gains taxes on the $5 gain that occurred after Jill's death, while the $40 gain that occurred during Jill's lifetime is never subject to income taxes due to the step-up in basis.

Authors

• Person: Not available Organization: Center for American Progress
  How the Government Subsidizes Wealth Inequality

Sources

• How the Government Subsidizes Wealth Inequality www.americanprogress.org Center for American Progress via serper

Referenced by nodes (2)

• capital gains tax concept
• step-up in basis concept