Generally, the property you inherit from a decedent receives a “step-up” (increase) in basis equal to the fair market value of the property at the time of death. The step-up is potentially valuable as it allows the beneficiary to avoid paying capital gains tax on any appreciation in the value of the asset prior to the decedent’s death upon the future sale of the inherited property. However, when it comes to inheriting shares of stock in an S corporation, beneficiaries can be hit with a significant tax bill if they are not careful about selling property owned by the corporation.
Tax
Can Trusts Take Advantage of the Tax Benefits of S Corporations?
When it comes to tax planning, business owners should learn the difference between a C and an S corp trust.
The letters refer to the subchapter of the federal tax code relating to the income taxation of corporate structures. For businesses, S corporations can provide a way to avoid the kind of double taxation that C corporations incur.
Time To Act on Valuation Discounts For High-Value Estates
For many high-wealth individuals, effective estate planning is largely motivated by the desire to minimize the estate and income taxes their heirs may pay. Reducing estate taxes often means maximizing the benefits of the unified credit amount through the use of valuation discounts.