Written/Reviewed By:
Barry S. Kantrowitz, Esq.
Last Updated: Aug 26, 2019
Read Time: 2 mins
NY & NJ estate lawyer Paul Goldhamer, Esq. is a founding partner at Kantrowitz, Goldhamer, Graifman, Perlmutter & Carballo, P.C.. Mr. Goldhamer was selected to the Super Lawyers® list in 2014-15. In addition to practicing matrimonial law, he maintains a busy schedule of lectures, charitable work, and media appearances.
From Paul Goldhamer, Esq.:
Say taxpayer Harry is likely to live only a few years and spouse Jane has $100,000 of stock with a cost basis of $20,000. Jane transfers the shares to Harry and reacquires them under Harry’s will. The $80,000 profit escapes income taxation.
Gimmicky? Yes, but Congress permits this maneuver, so long as Harry holds the shares for at least a year. If there’s less time than that, there still may be a way to make the escape from capital gain taxes. The one-year rule doesn’t apply if the assets do not go right back to the person who started with them.
Here it is explained again:
Up until now we have been primarily concerned with estate taxes. Sometimes it is also wise to consider income tax planning. If a person receives a gift of appreciated property and then dies within one year, that property will not receive a step-up in basis if it passes back to the donor. The step-up in basis, if available, will eliminate the 15% capital gains tax on the amount of appreciation. Gifts to an ill spouse should therefore not be overlooked as the ill spouse may survive more than a year. Other planning may be used to balance the assets to obtain both income and estate tax benefits.
