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Choosing Between an Estate Tax and a Basis Carryover Regime: Evidence From 2010

Robert N. Gordon, David Joulfaian, and James M. Poterba

Abstract:

Executors of estates for decedents in 2010 could choose between an estate tax regime and a basis carry-over regime. This typically created a tradeoff between a current estate tax payment and a future capital gains tax liability for beneficiaries who inherited assets with carryover-basis. Some executors chose to file estate tax returns, but these filings yielded very little estate tax revenue. Evidence from tax returns suggest that an increase of one percent of estate value in the difference between estate tax liability and prospective tax liability under the carryover basis regime reduced the likelihood of filing an estate tax return by between 0.3 and 1.5 percentage points.

Citation

Robert N. Gordon, David Joulfaian, and James M. Poterba (2016), Choosing Between an Estate Tax and a Basis Carryover Regime: Evidence From 2010, National Tax Journal, 69:4, pp. 981-1002

DOI: doi.org/10.17310/ntj.2016.4.12