For example, say that Robert has stock worth $100,000 that he bought for $10,000. If he sells it before he dies, he’ll owe up to $21,420 of federal tax on his $90,000 gain. But if he dies without selling his income tax will be zero, leaving more for heirs. Although Robert’s estate could owe estate tax on the full $100,000 value of the shares if his assets exceed $11.7 million , this levy can often be reduced with planning.
But the most powerful benefit of capital gains, say tax specialists, is that investors can choose when to have taxable income by timing their sales—and that could be never, if they hold assets until death. Wage earners don’t have this ability. To obtain cash while alive, some investors avoid sales that trigger taxes by borrowing against their assets.A pre-markets primer packed with news, trends and ideas. Plus, up-to-the-minute market data.
Source: News Formal (newsformal.com)
BTW, China does not have long-term capital tax at all. How would we compete with China investing in economy in the long run, if we had a super high tax rate discouraging on investment.
The time value of money (TVM), the author failed to take into account! The lower long-term capital gain and the step-up cost basis partially offset the losing value of money over time.
AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for U.S. stock market investors.
It would apply to taxpayers with income over $ one million.
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