This bill supports the stepped-up basis, which helps family farms and small businesses pass on their operations to the next generation without facing higher taxes.
Tracey Mann
Representative
KS-1
This bill expresses the House of Representatives' support for maintaining the stepped-up basis under section 1014 of the Internal Revenue Code, which allows inherited assets to be adjusted to their current market value, protecting family-owned farms and small businesses from increased taxes. It opposes any changes to the tax code that would negatively impact the ability of these businesses to pass their operations on to the next generation. The bill recognizes the importance of generational transfers for the continuation of family farms, ranches, agribusinesses, and small businesses.
House Resolution Backs Tax Break for Inherited Farms and Businesses: Stepped-Up Basis in Section 1014 Supported
This House resolution throws its weight behind keeping a tax provision called "stepped-up basis"—basically, a rule that lets people who inherit things like farms, equipment, or buildings adjust the asset's original cost to what it's worth now. Why does this matter? It can seriously cut down on the taxes owed when these assets are eventually sold.
Keeping it in the Family
The resolution highlights why this matters for family businesses. It points out that a whopping 98% of farms are family-run (according to the Department of Agriculture), and 19% of all businesses are family-owned (that's from the Small Business Administration). The core message? Preserving the stepped-up basis is crucial for passing these businesses down to the next generation.
Real-World Impact
Imagine a family that's been farming the same land for generations. When the original owner bought it, land might have been cheap. Today? It could be worth way more. Without stepped-up basis, the heirs would be taxed on the original purchase price, not the current value—potentially a massive tax bill that could force them to sell the farm. Section 1014, referenced in the bill, is the specific part of the tax code that makes this adjustment possible. The resolution cites a study showing that 66% of midsized farms would see their taxes go up if this provision were removed.
Bottom Line
This resolution is all about protecting family farms and small businesses from potentially crippling tax burdens when they're passed down. The House is essentially saying, "We support keeping the stepped-up basis, and we're against any new taxes that make it harder for families to keep their businesses going." It's a clear signal that they recognize the economic—and sentimental—value of keeping these operations in the family.
The Bigger Picture
The resolution stresses that getting rid of the stepped-up basis would make it extremely difficult for farmers, ranchers, and other small business owners to transfer their operations. It's not just about taxes; it's about the continuity of these businesses, many of which are cornerstones of their communities. While the resolution doesn't get into the nitty-gritty of potential loopholes or broader tax fairness debates, it focuses squarely on the impact on family-owned enterprises.