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Further Thoughts On Realizing Gains And Losses At Death, Joseph M. Dodge

Vanderbilt Law Review

Professor Lawrence Zelenak has put forth a detailed proposal' for repealing present Section 1014 of the Internal Revenue Code, which gives a decedent's successor a basis equal to the estate tax value of property at death. This rule, commonly known as the stepped-up basis (at death) rule, has been roundly criticized as producing an unwarranted (inequitable, nonneutral) income tax loophole, because the step up in basis without realization of gain removes the gain from the tax system entirely. Its repeal, therefore, offers a potential source of significant revenue. Moreover, Section 1014 aggravates the "lock-in effect"; that is, it inhibits rational …