"kw" <kwdrums[at]aol.com> wrote:

- quote -

It's all irrelevant as estate tax paid has no bearing on an
asset's basis. The fact that you cannot find anything to
verify your assertion SHOULD have been a good indicator that
no such thing exists.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

kw wrote:
- quote -

False. However, as the other reply stated, GIFT TAX is
added, but with a gift, there's no step-up to FMV.

- quote -

Way off.

However, there is one way that an addition to basis besides
the estate tax's value of the assets might occur: If the
estate cannot pay its tax (i.e. no liquid assets) and a
beneficiary loans the estate the funds to pay the tax - AND
that beneficiary doesn't receive any property he wasn't
already entitled to and no excess property exists, then the
loan amount might be capitalizable into the assets received
(instead of bad debt treatment). However, I don't believe
that this has ever been tested before the Tax Court. The
implication is that the amount loaned was necessary to
obtain clear title to the property and to clear off the
automatic implied estate tax lien that attaches at death.
Lots of "if's" here.

In your case, since the estate was able to pay its tax, this
wouldn't apply.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

"kw" <kwdrums[at]aol.com> wrote:

- quote -

There is no such rule for estate tax. Part of the *Gift* tax
paid on *gifts* of appreciated property is added to basis
under Tax Code Section 1015(d). The amount to add is: tax *
[(FMV-Old Basis)/FMV]. Also, there is an itemized income tax
deduction for estate tax paid on assets that don't get a new
basis at death, such as retirement plans and other "income
in respect of a decedent." But if the bonds got a "value at
death" basis, then that's the basis to use if they are sold.

Bob Daniels ("There's no luggage rack on a hearse, and no
pockets on a shroud." - 'G)

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

I have heard that estate tax paid on the value of an
investment can be added to that investment's basis. Is this
true? I cannot find anything in print; either to verify or
deny.

I have a client who inherited a sizable portfolio of
muni-bonds from a decedant's estate. The estate paid nearly
800K in tax (form 706) based on the value of those bonds at
death.

Adding a pro-rata portion to each bond's basis would create
a sizable capital loss upon sale. Over time, once all the
investments had been sold, I presume you would recoup the
800K.

Does this seem correct? Or am I way off base here?

Thanks,
KW

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >