GFB seeks to protect stepped-up basis for family farms
President Biden recently announced his two-part infrastructure plan with a price tag exceeding $4 trillion. The president’s proposal calls for partially offsetting this spending with tax increases, including making changes to stepped-up basis.
Stepped-up basis refers to how inherited assets are valued for tax purposes. It has allowed American farm families to pass their operations to their children and grandchildren for generations without forcing them to sell land and/or other assets to cover the tax bill.
Under stepped-up basis, a farmer pays capital gains taxes only on a property’s increase in value since the time that land was inherited, instead of paying the full increase in value since it was purchased by a deceased relative. In addition, the tax on the new stepped-up value is deferred until property is sold by the surviving family member.
One of the reasons the step up in basis is so important to farmers and ranchers is the asset values in agriculture have appreciated significantly in recent years. As a result, when farmland is inherited, without a step up in basis, many farmers would face very significant capital gains taxes. For the American Farm Bureau Federation’s full Market Intel report on stepped-up basis, visit https://gfb.ag/AFBFstepupbasisanalysis.
The American Families Plan, as proposed, could put the continuity of family farm operations in jeopardy. Georgia Farm Bureau is asking for help to keep stepped-up basis. Visit https://gfb.ag/GFBstepupbasisltr to write your Congressman and ask for the preservation of stepped-up basis which supports American farmers.
For individual property and tax situations, farmers should consult with a certified public accountant or an attorney specializing in taxation.