step up basis, goodwill, sole proprietorship, suriviving spouse

Discussion in 'Tax' started by bm30003700@aol.com, May 13, 2005.

  1. Guest

    a few years ago there was a court case that determined that
    a person inheriting a sole propertorship from their decedent
    spouse in a community property state only received a step up
    of one half of the goodwill value in the business, even
    though the remaining assets were received with step up of
    full value.

    has this changed?

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    , May 13, 2005
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  2. "" <> wrote:

    > a few years ago there was a court case that determined that
    > a person inheriting a sole propertorship from their decedent
    > spouse in a community property state only received a step up
    > of one half of the goodwill value in the business, even
    > though the remaining assets were received with step up of
    > full value.
    >
    > has this changed?


    I don't remember seeing any case like that. Doesn't make
    sense to me.

    If the business was community property and half included in
    the decedent's estate for estate tax purposes, it should
    receive a stepped up basis on the whole thing under section
    1014(b)(6).

    On the other hand, if it was separate property of the
    deceased spouse, the entire value should receive a stepped
    up basis under section 1014(a).

    Stu

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    Stuart A. Bronstein, May 16, 2005
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  3. Rick Merrill Guest

    wrote:

    > a few years ago there was a court case that determined that
    > a person inheriting a sole propertorship from their decedent
    > spouse in a community property state only received a step up
    > of one half of the goodwill value in the business, even
    > though the remaining assets were received with step up of
    > full value.


    The "goodwill value" is an intangible. The rule sounds
    pretty reasonable, but you should have an accountant handle
    that. If the 'goodwill' was just a small part of the total
    valuation, that would be very different than if the goodwill
    were half the total valuation.

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    Rick Merrill, May 16, 2005
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