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

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  • Robert N. Gordon
  • David Joulfaian
  • 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.

Suggested Citation

  • Robert N. Gordon & David Joulfaian & James M. Poterba, 2016. "Choosing Between an Estate Tax and a Basis Carryover Regime: Evidence From 2010," National Tax Journal, National Tax Association;National Tax Journal, vol. 69(4), pages 981-1002, December.
  • Handle: RePEc:ntj:journl:v:69:y:2016:i:4:p:981-1002
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    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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