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Ok, I am not being clear so I give up. Death taxes and estate taxes are double taxation and I was wrong. Everyone keeps delving into laws and exclusions and limits while I was trying to explain why an heir paying taxes is not double taxation (and that was all, no more) but am unable to do so in a clear manner, I apologize.
Dad makes money.
Dad pays taxes on money
Dad dies
Junior gets money he did not have before
Junior pays taxes on new money to him he did not have before.
Who has paid taxes twice?
Discussing things on a high level means very general terms that are not absolute (quite far from it) and not getting into the minutia of the item being discussed. Just the most basic of the idea.
But back on topic.....

Again, i was not arguing how it was treated. Just the fact it is not double taxation. Why does everyone want to delve into law when i am just referring to the definition of "income". There are lots of forms of income and lots of ways it is handled. I, again, am talking at a very high level not the specific laws.

Sorry, was thinking local. Uhcl is university of houston clear lake. Yeah i agree with the bull part. Wish they would get some other term.

JALLEN wrote:

rm9792 wrote:It is not double taxed. Yes the money your parents earned was taxed as income to them when they earned it. However when they die and it goes to you then it becomes income to you as yet untaxed by you. You were not in posession of the money or property till their death so now that you have income you must pay taxes on it. However, that being said I think estate taxes are out of line and should be abolished. If it must be kept then the rate should simply be the same as your regular tax rate.

Well, sort of.

Income tax is not the same as estate or inheritance tax. What you inherit is not income to you, and in most cases, the tax is on the estate, not on the recipient. The current rules allow estates of up to $5.12 million to avoid all estate taxes, and that level can be effectively doubled for a couple. Large estates that do face taxes must pay a levy of 35 percent, which is low by estate-tax standards. Gift taxes have also been relaxed.



I should confess that I am the 17th reason to use H&R Block, and my taxes are handled by my CPA brother. The foregoing reflects my perhaps crude understanding of how thing work.

Never said it was the same tax. You have 2 types of income, earned and unearned. I am not talking Law here just theory. Income is any money or value incoming to you. Heirs did not have the money, then upon death they do, it is in fact unearned income. Now the IRS has it set at different rates and exclusions but I am strictly speaking high level that it is in fact income therefore as yet untaxed. My background is I am 6 classes short of my bull in Accounting/Finance. I am currently in Federal Taxation at UHCL and had this same discussion last week with the instructor, an IRS Auditor.
I still don't believe it should be taxed but the double taxation argument will not work to help end it as it simply isn't true. I for one would like to stop renting my property from the state and just pay higher sales taxes. At least then if I am ever in hard times I would never be homeless.

Jaguar wrote:

rm9792 wrote:It is not double taxed. Yes the money your parents earned was taxed as income to them when they earned it. However when they die and it goes to you then it becomes income to you as yet untaxed by you. You were not in posession of the money or property till their death so now that you have income you must pay taxes on it. However, that being said I think estate taxes are out of line and should be abolished. If it must be kept then the rate should simply be the same as your regular tax rate.

So you also support sales tax at garage sales?

No, I dont support the estate tax either. I merely pointed out it was not double taxed as the heirs had not paid tax on it. FYI, garage sales are income over and above the basis for the propperty sold so it is possible to tax them.

It is not double taxed. Yes the money your parents earned was taxed as income to them when they earned it. However when they die and it goes to you then it becomes income to you as yet untaxed by you. You were not in posession of the money or property till their death so now that you have income you must pay taxes on it. However, that being said I think estate taxes are out of line and should be abolished. If it must be kept then the rate should simply be the same as your regular tax rate.