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I guess stepped up basis is considered a loophole
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Distance Runner
Posted 6/30/2020 16:01 (#8345725 - in reply to #8345669)
Subject: RE: I guess stepped up basis is considered a loophole

SE SoDak
farmerkev - 6/30/2020 15:27

If you are already thinking about ways around it why on Earth do you think others also won't and your goal of eliminating absentee landlords goes up in smoke.

Not exactly. I'm more thinking mitigation than full avoidance. And that may mean that if capital gains tax on land truly becomes unavoidable, better to take it when you have limited other income sources (during retirement) by selling the land rather than passing it on to your heirs at death who (in theory) are then hit with the tax burden during their peak earning years. In this scenario, your heirs are much better off inheriting cash than land. Earlier transfer of ownership within farming families would thus be encouraged by the tax code. Kind of like the 1960s. Possibly a good thing.

Absentee owners would feel the same incentive to sell. Their kids would much rather inherit cash in that scenario. Heck, many of them couldn't find the land they own without a map anyway, so they don't feel the same emotional loss.

It is all of course theoretical at this point. I'm sure there will be many creative ways devised to avoid the tax, just as there are now. Tax avoidance is the national sport.

Edited by Distance Runner 6/30/2020 16:05
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