Recognizing the importance of stepped-up basis under section 1014 of the Internal Revenue Code of 1986 in preserving family-owned farms and small businesses.
Impact
The resolution's endorsement of the stepped-up basis is projected to protect family farms from increased tax burdens that could arise if this provision were to be eliminated. A significant portion of family farms would reportedly face heightened tax liabilities if the stepped-up basis were repealed, potentially endangering their financial sustainability and the ability to transfer operations to future generations. The resolution strongly asserts that eliminating this provision could threaten the viability of numerous farms and small businesses by complicating succession planning and generating unwarranted tax costs.
Summary
House Resolution 206 emphasizes the critical role of the stepped-up basis provision under Section 1014 of the Internal Revenue Code of 1986 in safeguarding family-owned farms and small businesses. The resolution highlights how this tax provision allows heirs to adjust the asset cost basis to its fair market value upon inheritance, which is beneficial for family farms and businesses as it alleviates potential tax liabilities during generational transfers. The bill is driven by the recognition that a vast majority of farms and businesses are family-owned, thereby underscoring the importance of accommodating their continuity through supportive tax policies.
Contention
While the resolution promotes the preservation of the stepped-up basis as a measure to support family business succession, there may be underlying contention regarding tax policy reforms. Some policymakers and advocacy groups could argue that maintaining such tax provisions disproportionately benefits wealthier family holdings and may hinder broader tax reform efforts aimed at equity. However, supporters contend that the resolution addresses a fundamental need for family-owned operations to be able to pass down their business without facing excessive new tax implications, maintaining agriculture's role as a cornerstone of the economy.