[creer]

> avoid paying taxes altogether

At some stage in wealth, perhaps, and not avoid but postpone. More important probably are cases where actually selling the shares means giving up control over a business, or having to settle things with the rest of the family whose "destiny" it is to hold these shares in common.

[deepsun]

Not postpone -- avoid. The base price of the asset is adjusted at the time of your death, so if bank sells the asset immediately, they pay no taxes.

https://www.reddit.com/r/BuyBorrowDieExplained/comments/1f26...

[creer]

There is confusion between capital gains tax and estate tax (and estate planning devices like trust law). And that matters.

Is the problem capital gains tax as some people claim or is it elsewhere?

In the process described, capital gains tax is not even postponed (and that write up does not provide for Peter's major expenses during life). That write up works (when it does) because of bypassing estate tax.

The need for realizing capital gains is eliminated through trust, estate planning and other estate tax law (seems to me). The whole of the procedure is in that side of the equation. Not in capital gains tax law.

So the question: Does this all call for a change in capital gains tax law or changes in estate planning (trusts) and estate tax law?

When you use margin loan or pledged assets lines of credit, you are postponing. Which you can potentially kick all the way into estate tax (which your estate may pay if it's large enough). That write up is different still and describes working around even that estate tax. And then the question does matter of which law you are asking to change. (Besides the traditional method of making a law, any random law, thereby solving all problems for eternity - or at least gaining some voter satisfaction.)

[deepsun]

Yep. The link above says:

> The conventional wisdom is that you can avoid income tax (via the basis adjustment at death) or you can avoid estate tax (via lifetime gifting and estate freezing strategies) but you can’t do both. This conventional wisdom is wrong, and I’ll explain why below.

[scoofy]

No.