FEDA has signed on to a letter supporting the continuation of stepped-up basis for family-owned businesses.
The Family Business Estate Tax Coalition sent the letter to Rep. Richard Neal (D-MA) and Rep. Kevin Brady (R-TX), chairman and ranking member of the House Committee on Ways & Means, urging them to protect stepped-up basis. Under the current step-up rule, an heir who later sells the business only faces capital gains taxes on the difference between the sale price and the business worth at the time of the inheritance. Changing the rule, as the Biden Administration has proposed, would force many family-operated businesses to liquidate assets or reduce their workforce to pay the tax burden upon the current owner’s death.
“A recent EY report forecasts that 40,000 jobs would be lost in each of the first 10 years and GDP would decrease by $50 billion over 10 years if stepped-up basis were repealed via carryover basis,” the letter states. “Carryover basis is not an effective exemption from step-up repeal for family-owned businesses and farms, and the FBETC opposes any such misguided “protections.”
To read the full letter, please click here.