[AlexandrB]

I think this is the right analysis. If Bezos has sold all that stock the day before he died, he would have owed capital gains on it and the remainder would be inherited. That's roughly the same situation as described with the liquidity event moved a few days yet it's not "double taxation".

[jkhdigital]

No that’s just bad estate planning… kind of like how a pair of rich siblings could gift each other $1 million and it would be taxed as income for both despite neither experiencing any change in wealth. Income taxation is impossible to implement without logical inconsistencies.

[loeg]

> how a pair of rich siblings could gift each other $1 million and it would be taxed as income for both despite neither experiencing any change in wealth

No. Gift taxes are paid by the gifter. Gifts are not income for the recipient. Additionally, there are annual and lifetime exclusions for gift tax.

[dragonwriter]

> Gifts are not income for the recipient.

They manifestly are income for the recipient.

They aren't taxed as such, though, because undertaxing income through generational wealth transfer is how you preserve a privileged elite.

> Additionally, there are annual and lifetime exclusions for gift tax.

The annual per-recipient limits are large, only amounts over them count against the lifetime limit, and the lifetime limit is enormous.

[jkhdigital]

Yeah as soon as I wrote that I looked at the gift tax rules and shrugged. Either way, both gifts are being “taxed” although the arcane gift tax rules seem to imply that no actual tax will be paid unless and until one of them reaches the lifetime threshold of ~$11M.

[md_]

Moreover, if Bezos had earned that as income instead of capital gains, it would have been “doubly taxed” upon inheritance; in effect, this rule (as with many others) merely excludes capital gains from taxes that apply to earned income.

The argument that the step up basis avoids double taxation appears to be slight of hand. By the same rationale, you should earn a tax credit for sales taxes paid during the tax year.

[WalterBright]

Of course it's double taxation.