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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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