As part of his new tax plan, the president has proposed ending the “step-up” in tax basis for inherited assets, and, furthermore, requiring the capital gains tax to be paid at death rather than when an heir later sells...
- State of Celebration
State of Celebration
Same-sex couples have much to celebrate in the IRS's announcement today that it will allow all married same-sex couples to file jointly regardless of their state of residency, but it does raise questions for states whose tax code is tied to federal definitions of income yet prohibit same-sex marriage. My colleage Joe Henchman has a paper up describing the main issues at stake. There are 24 (or potentially 25 if New Mexico is included) states that will need to address the issue:
The states shaded red prohibit same sex marriage, and the ones with diagonal lines overlaid tie their tax code to federal definitions of income. The states that fall under both these categories are the ones that will need to address the conflict between their state tax system and the federal tax one before next year. (New Mexico's marriage statute is gender-neutral and neither expressly recognizes nor expressly prohibits same-sex marriage, so it's unclear how this ruling will affect the state.)
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