Qi said:
Look into the step-up in basis rule. Just make a family member the beneficiary and don’t try to time things like this.
This whole thing is 
If someone transfers all their assets to beneficiaries before dying, leaving the estate empty, the IRS can still go after the beneficiaries to collect the unpaid taxes.
If you think you’ve found a clever way to dodge the IRS, they’ve already thought of it and made it illegal.
The IRS HATES this one simple trick.
If the assets were sold, the tax liability would be included in the person’s final return, and the estate would cover it. If the gains were unrealized, the family could benefit from the step-up in basis and avoid most taxes.
Yes, the beneficiaries could be liable for taxes on the original gains.
Morgan said:
Yes, the beneficiaries could be liable for taxes on the original gains.
In this case, the family received cash, not the stocks.
Morgan said:
Yes, the beneficiaries could be liable for taxes on the original gains.
In this case, the family received cash, not the stocks.
If the funds were left in accounts, they’d still be considered beneficiaries.
Sloane said:
@Yan
The title clearly says the money was transferred, so I don’t get why this is being debated.
The downvotes might be more about your tone than your point. Let’s keep it civil. Everyone’s just trying to help.
The tax liability belongs to the person who recognized the gain. You can’t just gift money away to avoid taxes. Also, the IRS enforces laws—it’s not out to ruin lives.
Yes.
Depending on total income, some capital gains might be taxed at 0%. Not worth doing anything drastic over it.
They won’t go after the family directly, but they can go after the transferred assets during the clawback period.
Any capital gains would still be part of the final tax return for the deceased.
The estate is responsible for the tax on any capital gains. If the funds were distributed early, the beneficiaries might need to return the money to cover the tax.
Set up TOD accounts, and the money will go directly to beneficiaries without being part of the estate.