Carryover basis of appreciated property transferred by gift
Giving away an appreciated asset triggers no tax; the gain passes to the recipient.
JCT line: "Carryover basis of appreciated property transferred by gift". Declines to $11.2B by FY2029.
Requires owning substantially appreciated assets and being able to give them away, which describes a narrow population. The benefit is the deferral of tax on accrued gain at the moment of transfer, proportional to how much gain has accrued.
Structural reading
The lifetime companion to step-up in basis at death, and the two are best read together. Step-up extinguishes accrued gain at death; carryover basis on gifts defers it during life, moving the asset without settling the liability. Used in combination the pair allows an appreciated asset to change hands during life without tax and then have its entire accrued gain erased when the recipient dies. Neither provision was designed with that sequence in mind, and each is defensible on its own terms, which is a fair description of how the code produces outcomes nobody legislated.
Who gets it
The channels the benefit actually flows through, described by asset position, entity form and form of return. Never by named individuals.
Cost split by the concentration score. That score is a judgement rather than a published figure, so treat this as the scale of the split, not an audited allocation.
- Donors of substantially appreciated assets
No tax is due on transfer despite a change of ownership, so accrued gain moves to the recipient untaxed and the liability is postponed rather than settled.
- Transfers to lower-rate recipients
Because the gain travels with the asset, giving it to someone taxed at a lower rate converts a timing benefit into a permanent rate reduction when the asset is eventually sold.
- Gifts held until death
An asset given away and then held by the recipient until their own death can meet the step-up rules, at which point the accrued gain is extinguished rather than merely deferred.
Who pays
Taxpayers generally. Wage earners cannot transfer a tax liability along with an asset.
This transfer follows a general pattern, asymmetric organisation, sustained expert attention, and scheduled expiry dates.
How rent-seeking works →Legislative history and accountability
Enacting statutes, major amendments, recorded votes with party breakdown, and live reform proposals.
Enabling legislation
- Revenue Act of 1921, basis of gifted propertyNov 23, 1921
Established that a recipient of gifted property takes the donor's basis, so no gain is recognised at the moment of transfer.
Voice vote, no division recordedPredates recorded electronic voting; no division on this provision is recorded. No separate roll call on this provision is recorded here.
Sources and data freshness
Published within the last year. Figures marked unverified are seed estimates that have not been reconciled line-by-line against the primary source document. See the methodology for how each score is constructed.