Taxation of Unrealized Gains at Death – An Evaluation of the Current Proposal

Michael J. Graetz, Columbia Law School


Forty-two years ago, in the Virginia Law Review, long before Congress twice enacted – and twice repealed – carryover basis for assets transferred at death, I published this article examining and evaluating a number of proposals for taxing gains at death, as well as for carryover basis. (One of these was being advanced by the American Bankers Association.) The president, in his State of the Union address on January 20, 2015, has again proposed a tax on gains on assets transferred at death. This article may be helpful in identifying some of the main issues and alternatives if Congress considers the proposal in its upcoming tax reform deliberations. I have made no attempt to update this article for current circumstances. Most of the design issues remain unchanged, although the exemption and illustrative numbers are out of date.