CONTENTS

I. Introduction.

II. Summary.

II. Background-Income tax treatment of property acquired

from a decedent..

A. Prior to the Tax Reform Act of 1976.

B. Carryover basis under the Tax Reform Act of 1976.

C. Revenue Act of 1978.

IV. Carryover basis issues..

A. Tax equity issues_

B. Liquidity issues_

C. Lock-in issues.

D. Administrative problems.

V. Alternatives.

A. Single Rate Additional Estate Tax (AET)

B. Graduated Appreciation Tax at Death_

C. Taxing Gains at Death.

I. Transitional issue..

II. Revenue estimates..

(III)

I. INTRODUCTION

The carryover basis provision described in this pamphlet has been Beduled for hearings on March 12, 19, and 20, 1979, by the Subcomtee on Taxation and Debt Management Generally of the Senate Committee on Finance.

In connection with this hearing, the staff of the Joint Committee on aration has prepared a description of the prior and present income tur treatment of property acquired from a decedent, the principal Ses raised by carryover basis, and possible alternatives to carryover sis. The estimated revenue effect from repeal or certain possible difications of carryover basis also is presented.

(1)