Presently, when someone dies, the individual inheriting property gets to step up the tax basis of this inherited property to its fair market value and there is not income tax paid by anyone even though this property's tax basis is stepped up.
The end result here is that capital gain tax on the increase in the value of the property is completely avoided by both the giver and receiver of the property. This is one of the most egregious tax loopholes and defies logic. And it's another case of a US Congress that has continued to legislate only for the top 1%.
My recommendation here is that the individual inheriting the property should use the tax basis the property had in the hands of the person who died.....thus the inheritor of the property gets carry over tax basis, instead of using the stepped up fair market value of the property inherited.
Thus, when this inherited property is subsequently sold, there will be a much higher capital gain recognized for US federal income tax purposes.
