[HDThoreaun]

Couldn't disagree more. Buy, borrow, die, is an insidious loophole that is costing the government billions in lost taxes.

> grandpa gave the house to Alice and the rest of his estate to Bob"; if capital gains were due on the house, would Alice have to pay them or would Bob?

Capital gains taxes are paid when the asset is sold. When the house is sold the owner should have to pay the full capital gain tax, not the amount that has accrued since grandpa's death. If alice doesn't want to sell the house that's up to her.

[sokoloff]

An hour before he died, Grandpa George could have sold the house and excluded $500K of capital gains (if his spouse died within the prior two years) or $250K otherwise. He could then pass his estate tax-free to heirs (assuming it was a typical "normal person sized" estate). In that case, the value of the house is now in [stepped-up/not taxed] dollar bills.

Why should the fact that he transferred a minute after he died rather than 60 minutes before make a difference to the taxes owed? Sell it for a fair market price to Alice a minute before you die, then transfer the proceeds of the sale to her as part of your estate. Same effect.

[HDThoreaun]

I don't care about excluding up to $500k. I care that billionaires entire fortune is excluded when they die. We can go round and round about which loopholes make sense. But in the end I don't think there is any reason that billions of dollars of equities should be excluded from paying capital gains taxes just because their owner died. You shouldn't get a tax advantage for dying. Selling everything you own the day after you die should have the same tax implications as selling everything the day before you die.

[sokoloff]

I care more about what happens to the estates and heirs of the 3M less than millionaire regular Americans that die every year and what happens to their estates than I do about the ~15 billionaires that die each year.

> Selling everything you own the day after you die should have the same tax implications as selling everything the day before you die.

I agree with that . That's exactly why the vast majority of family homes would be passed along tax-free, with stepped-up basis (as was my point above: "the basis should be as of the date of death, with any taxes due owed from the estate, not the heirs" [which I thought earlier you "Couldn't disagree more"]).