Taxing Gains at Death: A Further Comment

Professor Lawrence Zelenak\u27s recent Article provides an excellent analysis of the relevant issues and their treatment in a tax regime in which gains and losses are recognized at gifttime and deathtime transfers.\u27 I have argued for the same policy change, suggesting further the repeal of the wealth transfer tax system altogether and possibly the repeal of Section 1022 to require the inclusion in recipients\u27 gross income of gifts, bequests, devises, and inheritances.\u27 Still further, in agreement with Professor Zelenak, I would retain the present concepts of the marital deduction, unlimited charitable deduction for deathtime transfers, and some minimum exemption that would be indexed for inflation. Under present legislative rubrics, any proposed Code amendments resulting in revenue reductions must be paid for with other amendments. The transfer tax system is approximately a twelve billion dollar revenue gainer. Revenue estimates vary on the amount that would result from taxing net gains on gifttime and deathtime transfers; assume for purposes of the present discussion that rules could be fashioned to produce more than twelve billion dollars to offset the revenue loss if the wealth transfer tax system were eliminated. Moreover, if Section 102 were repealed, the revenue gains would, of course, be substantially greater