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54 Tax L. Rev. 421 (2000-2001)
A Deemed Realization Approach is Superior to Carryover Basis (and Avoids Most of the Problems of the Estate and Gift Tax)

handle is hein.journals/taxlr54 and id is 431 raw text is: A Deemed Realization Approach Is Superior to Carryover Basis (and Avoids Most of the Problems of the Estate and Gift Tax) JOSEPH M. DODGE* TABLE OF CONTENTS I. Introduction ............................................ 423 II. Setting the Stage ........................................ 424 A. Are the Federal Transfer Taxes Terminally III? ..... 424 B. Solutions Within the Income Tax ................... 430 Ill. Theoretical Comparisons of the Various Alternatives ... 431 A. Historical Origin of Fair-Market-Value Basis and Carryover Basis ..................................... 431 B. Defense of Deemed Realization Under Income Tax Theory .............................................. 432 C. Attributing Gains and Losses to the Right Taxpayer ............................................ 434 D. Equity Among Legatees ............................ 440 E. Economic Efficiency ................................ 442 IV. Practical Comparison of the Carryover-Basis and Deemed-Realization Systems ........................... 444 A. Revenue Effect ..................................... 444 B. Life Insurance ...................................... 445 C. The Generation-Skipping Problem .................. 445 D. Valuation and Liquidity ............................. 446 1. Valuation ....................................... 446 2. Liquidity ........................................ 448 E. Determining Basis .................................. 448 1. Historical Basis ................................. 448 a. General Considerations ..................... 448 * Joseph M. Dodge is the Steams, Weaver, Miller, Weissler, Alhadeff & Sitterson Professor, Florida State University College of Law. Much of this article was prepared while I was Visiting Professor, University of Utah College of Law. I wish to thank Jay Soled and James Repetti for their comments. An early version of this paper was presented on Oct. 6, 2000, at the Cleveland-Marshall College of Law Death of the Death Tax? Conference. 421 Imaged with the Permission of N.Y.U. Tax Law Review

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