H.R.es206 - Recognizing the importance of stepped-up basis under section 1014 of the Internal Revenue Code of 1986 in preserving family-owned farms and small businesses. (119th Congress)
Summary
H.Res.206 expresses the House of Representatives' support for preserving the stepped-up basis under section 1014 of the Internal Revenue Code of 1986. It highlights the importance of this provision for family-owned farms and small businesses, enabling the adjustment of inherited assets' cost basis to reflect fair market value. The resolution opposes any efforts to impose new taxes on these entities and recognizes the significance of generational transfers of farm and family-owned business operations.
Expected Effects
If passed, this resolution would signal Congressional intent to maintain the current tax treatment of inherited assets for family farms and small businesses. This could prevent future legislative efforts to eliminate or modify the stepped-up basis. The resolution itself doesn't change existing law but expresses the House's position.
Potential Benefits
- Preservation of Family Farms: Stepped-up basis helps family farms continue operating through generations by reducing tax burdens during inheritance.
- Support for Small Businesses: Similar to farms, small businesses benefit from the stepped-up basis, facilitating smoother transitions.
- Economic Stability: Maintaining the stepped-up basis can prevent potential disruptions in the agricultural and small business sectors.
- Reduced Tax Liability: Heirs can avoid significant capital gains taxes on inherited assets due to the adjustment in cost basis.
- Encourages Generational Transfers: The resolution supports the transfer of farms and businesses to the next generation.
Potential Disadvantages
- Potential Revenue Loss: Preserving the stepped-up basis could result in lower tax revenues for the government compared to eliminating it.
- Tax Inequity: Some may argue that the stepped-up basis creates a tax loophole that disproportionately benefits wealthier individuals.
- Complexity: The stepped-up basis can add complexity to tax planning and compliance.
- Limited Scope: The resolution focuses narrowly on farms and small businesses, potentially overlooking other areas where the stepped-up basis may have implications.
- No Direct Legal Impact: As a resolution, it doesn't have the force of law and may not prevent future changes to the tax code.
Most Disadvantaged Areas:
Constitutional Alignment
The resolution aligns with the general principles of promoting the general welfare, as stated in the Preamble of the US Constitution, by aiming to support family farms and small businesses. While the Constitution does not explicitly address tax policies like the stepped-up basis, Congress's power to tax and spend for the general welfare is well-established. The resolution does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).