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John Domestic
John Domestic, Lawyer
Category: Family Law
Satisfied Customers: 4631
Experience:  Over 13 years of Experience in Family Law.
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My parents left my brothers and myself a farm that has been

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My parents left my brothers and myself a farm that has been in the family for 100 years. It was left via an LLC. As a result we did not get a step-up when our parents died. Is there anyway to change the vehicle so that the next generation can get a step up? If not wouldn't our estate taxes go back to the beginning?
Submitted: 5 years ago.
Category: Family Law
Expert:  John Domestic replied 5 years ago.
Thanks for trusting Just Answer. As an attorney I will answer as clearly as possible. I ask for you Accept my answer so I am paid when we are done.

The LLC does not have to be dissolved to get a stepped up tax basis. If the LLC interests where left in the "estate" of the members instead of gifted prior to the current generation's death then the heirs of the current generation will get a stepped up tax basis on the LLC interests.

The LLC can be dissolved by agreement of all the current members.

I am not sure what you mean by "wouldn't our estate taxes go back to the beginning?"
Customer: replied 5 years ago.
What would be the taxable event for the next generation is my question.

Are you saying they would automatically get a step up if we do not gift it prior to the current generation's death?
Expert:  John Domestic replied 5 years ago.
I am saying that it would get a stepped up basis if you do not gift it prior to the current generation's death. The taxable event is the passing from one generation to another upon the death of the current generation. This triggers possible estate tax.

There is no Colorado estate tax. There is a Federal estate tax that is approximately 40% of the value of all assets in the estate of the current generation upon their death. However, there is a 5 million dollar estate tax exemption. If the estate is worth less than 5 million dollars then there would be no estate tax. The 5 million dollar exemption is set to expire at the end of this year and go back to a 1 million dollar exemption. It is possible that congress will fix the exemption reduction prior to the end of the year.
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