President Biden, in the recently released Department of the Treasury Green Book, has proposed far-reaching changes to the taxation of capital gains and the treatment of property that is gifted or transferred at death, including calling for the taxing of capital gains at ordinary income rates, and treating the receipt of assets upon death as a realization event. The proposal would be effective for gains on property transferred by gift, and on property owned at death by decedents dying, after December 31, 2021, and on certain property owned by trusts, partnerships, and other non-corporate entities on January 1, 2022.
The Biden proposal taxes capital income for high-income earners at ordinary rates for taxpayers with an AGI of more than $1 million ($500,000 for married filing separately), with 37% generally being the highest rate. Additionally, transfers of appreciated property by gift or upon death are treated as realization events in which the donor or deceased owner of an appreciated asset would realize a capital gain at the time of the transfer. For a donor, the amount of the gain realized would be the excess of the asset’s fair market value on the date of the gift over the donor’s basis in that asset. For a decedent, the amount of gain would be the excess of the asset’s fair market value on the decedent’s date of death over the decedent’s basis in that asset. That gain would be taxable income to the decedent on the Federal gift or estate tax return or on a separate capital gains return.
This is just a summary of the proposed changes to capital gains and transfer at death rules.
To discuss how the Biden Proposal could affect you, contact an SLK Taxation Specialist.
For more details on the proposal go to please complete the following form.