The Stepped-Up Basis Loophole for Inherited Assets

In this episode, Lucas and Luna unpack the stepped-up basis rule—a tax provision that lets heirs reset the cost basis of inherited assets to their date-of-death value, effectively wiping out decades of capital gains. They walk through a concrete example: a grandmother who bought Apple stock in 2008 for $8 a share and held it until her passing in 2026 when it's worth $220. Her heir sells immediately and pays zero capital gains tax on the $212-per-share gain. Lucas explains why this rule has been called the 'largest tax expenditure in the code' and why efforts to repeal it have stalled. Luna brings data from the Joint Committee on Taxation showing the stepped-up basis provision costs the federal government roughly $40 billion per year, with the benefits concentrated among the wealthiest 2 percent of estates. They discuss the political math: eliminating it would raise revenue but hit family farms and closely held businesses hard. The episode closes with planning considerations for anyone expecting an inheritance—and a reminder that the rules could change under the 2025 Tax Cuts and Jobs Act sunset provisions. #SteppedUpBasis #InheritedAssets #CapitalGainsTax #CostBasis #EstatePlanning #TaxLoophole #AppleStock #JointCommitteeOnTaxation #TCJA #WealthTransfer #FamilyFarm #CloselyHeldBusiness #Finance #TaxStrategy #FexingoBusiness #BusinessPodcast #TaxPlanning #InheritanceTax Keep every episode free: buymeacoffee.com/fexingo