209.533.2233
Sonora, CA
209.521.6260
Modesto, CA
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Step-up income tax Basis

OPPORTUNITY FOR SECOND INCOME TAX STEP-UP IN COST

Under current tax law a decedents assets are given a new tax cost of fair market value on date of death. With community property both spouses halves are revalued on first death. In most estate plans only the survivor's assets are revalued on the second death.

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Present Plan:

Value of Family Trust at First Death: $15,000,000

Survivor's Trust

Value at First Death:
$ 7,500,000
Second Death:
$ 12,216,710
Gain on sale:
$ 0
Income Tax:
$ 0
Value After Tax:
$ 12,216,710

By-Pass (Decedent's) Trust Current

Value at First Death:
$ 7,500,000
Second Death:
$ 12,216,710
Gain on sale:
$ 4,716,710
Taxable Gain:
$ 4,716,710
Income Tax:
$ 1,415,013
Value After Tax:
$ 10,801,697

Proposed Plan:

Value of Family Trust at First Death: $15,000,000

Survivor's Trust

Value at First Death:
$ 7,500,000
Second Death:
$ 12,216,710
Gain on sale:
$ 0
Income Tax:
$ 0
Value After Tax:
$ 12,216,710

By-Pass (Decedent's) Trust Revised

Value at First Death:
$ 7,500,000
Second Death:
$ 12,216,710
Gain on sale:
$ 4,716,710
Max Stepup:
$ 3,855,058
Recalculated Cost:
$ 11,355,058
Taxable Gain:
$ 861,652
Income Tax:
$ 258,496
Value After Tax:
$ 11,958,214
Present Plan After Tax:
$ 10,801,697
Income Tax Savings:
$ 1,156,517

Based in Modesto, CA with a location in Sonora, CA, Gianelli Nielsen, PLC serves clients throughout California.



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