Omitted an important detail.
I meant - if my kid sold those 286K+ shares and realized $32M of gain, she would not need to pay any tax due to the step-up in basis.
Could someone please give me an example of an heir paying estate tax the last few years? How does it happen?
I understand the heir doesn’t have to pay tax on the sale of the stock, because of the basis.
I didn’t understand the heir didn’t have to pay estate tax on the appraised value of the stock at the time of death?
I am just curious. This won’t be an issue for us. 
If someone inherits real estate appraised at more than 10mill at time of death, they won’t owe estate tax on the portion over 10mill? The whole counts as their basis and they only pay tax on appreciation after that point in time, when they sell?
Interesting that this has now become a thread discussing tax policy in general and the taxes paid by the rich and famous.
@dstark If the public is so fed up with the rich not sharing, way is a billionaire the leading candidate of the Republicans? He hasn’t made his name setting up foundations or giving away his money. And why do they re-elect 95% of the incumbents who stand for re-election. We hear so much about the “angry majority” but they never seem to vote…
That said, what has all this got to do with the OP??
@dstark,
That makes three people stating that you are off topic here. Will you stop going off on these tangents?
@alh You are correct in you assumption. By law, the FMV would be part of the estate. And the beneficiary of the estate does take a “step up” in basis and avoids capital gains tax on items included in the “tax estate”, (which is different than the “legal estate” going through probate.
There are ways estate planners use to avoid most of the tax using trusts. Estate tax is a very complex area in which I never really spend much time, so I can’t tell you the “how”. I’m not about to go above the $10m mark either;). Also, you can leave everything to a spouse at no estate cost.
We are “little people” and think in terms of the annual gift limits and the lifetime exemption. There is a reason The uber wealthy don’t revolt against estate taxes: they can afford the legal team to ensure the pay very little of them!
@dstark I love tax policy, so I’m ok with off topic:). And I agree you can’t really discuss “disgorging” those endowments without discussing tax policy. Maybe start a thread for tax policy in the Parent Cafe though and we wonks can discuss! Lol!
It’s only natural to bring up taxes in discussing private univ wealth. We need to separate what’s rightfully theirs (fund raised, grants received) from the wealth created by tax exempt status which belong to taxpayers. They can keep what’s theirs. I consider grants are theirs whether given by the government or private foundations. They earned it. Gifts received through fundraising are also theirs to keep except the tax deduction donors take. We should focus on the advantage of being non-profit; tax deductions taken by donors and exempted taxes on income generated by their endowment and other taxes they don’t pay. That is the cost to taxpayers. It is legimate to ask if taxpayers should give up the tax revenue when the tax revenue they give up amounts to $100K per student at Princeton while taxpayers give only $12K tax money to each student at Rutgers. We are not talking about taking anyone’s private money. We are discussing if their tax privilege is justified. Is it worth our money? Do they contribute enough to the society? Do a graduate from private u contribute 10 times more to the society than a grad from state u, proportional to the tax cost they impose on taxpayers?
alh,
“I understand the heir doesn’t have to pay tax on the sale of the stock, because of the basis.”
That’s not true. You are confusing income tax and estate tax. You don’t pay income tax since there’s no gain after “step up” but the estate would still have to pay estate tax if applicable.
In furrydog’s example in post #239 and #240, does his daughter pay estate tax on the appraised value of the stock at the time of parents’ death?
Long, long, long. ago - before the limit was raised so very high - my memory is that estate tax was paid on the portion of appraised value over the exempt limit. And then the heir got the stepped up basis for sales going forward.
My main question is whether anyone at all pays estate tax anymore. If so, can someone give me an example. I know a few decades back, people did still pay estate tax - people who considered themselves “middle class” At one point in time it was an issue for family farms, but that was really a long time ago now as far as I am aware.
Yes, furrydog’s estate will have to pay estate tax. The value of estate is the market value at death not cost basis. If it’s over the exemption limit, you pay 35% of the amount ovet the limit. The heirs on the other hand won’t pay income tax if they sell at death. They won’t have capital gains thanks to step-up. About 0.2% still pays estate tax.
@Iglooo that is exactly what I was thinking and you said it so well! It is not a black and white issue. There is nothing wrong with discussing it:)
I am not off topic. I have posted links that have tied everything together.
I think I am going to read about the Panama Papers now. 
@Iglooo “Rightfully theirs”?? That money is rightfully theirs as they complied with existing laws of this country. Just because you do not agree with those laws do not make them valid or “right”.
It’s a case of the politics of envy. I understand that. But these universities have done nothing wrong. And as I said, I am extremely doubtful that this proposed legislation will ever see the light of day.
You may like the retirement thread. No politics in that thread. Have you looked at it?
Right now they are on auto insurance…so that thread is off topic too! Lol!
Widget, it will never be law, don’t worry. And igloo is only saying that the $ being discussed is that amount of tax “if” the law were changed. Stop assuming ppl want to seize assets! (Unless some of you do, speak up!)
Voters don’t know or care about this issue at all, so there is no way it would happen. Still discussion worthy!
Gotta agree with widgetmidget on this @Iglooo. You seem to have a tenuous grasp on what is “rightfully theirs”.
?? What does that mean? My own kid goes to a private u known for their endowment. The issue is bigger than saving my own skin.
@HRSMom We just disagree on this issue. I have no problem with the wealth of some universities. And I certainly believe that the money is “rightfully” theirs as it was obtained legitimately.
I also agree with you that many universities are underfunded, and that the consequences of this underfunding is that many students do not receive the financial aid they require. I personally believe that the answer rests with taxpayers. They must decide whether or not to support their public universities.
Taxpayers should decide to fund public u but should not decide not to fund private u? Your compartmentalized intellect is simply mind boggling. If one cannot see beyond the tip of their nose, I don’t know what to say other than saying something clever as in we just disagree as if it’s something profound.
the thing that gets me is when a person donates 50,100,200 million or whatever to a Harvard or Stanford when they already have zillions of dollars. why not give it to a school that only has 15,20,30 million endowment and really make a difference.
but that is a personal choice of the person who has the $$$ to give.