The Green Book: the Biden Administration’s Proposed Tax Strategies

The Biden Administration recently released its Green Book, which outlines the administration’s proposed tax strategies for the current term.   The proposal to tax capital gains for individuals and trusts with incomes greater than $1 million at ordinary income tax rates (currently as high as 40.8%) has been much publicized.  The Green Book also contains some lesser-known provisions that could significantly change the taxation of transfers by gift or upon death. They are as follows:

  1. Transfers of property by gift would be considered recognition events and would, therefore, be subject to income tax to the extent that the fair market value exceeds the basis of the assets transferred. The donor would be subject to the tax on the gain, and it would be due with the gift tax return.
  2. Transfers upon death would be considered recognition events and the beneficiaries of the assets would be subject to income tax to the extent that the fair market value exceeds the basis of the asset owned by the decedent on the date of death. That tax would be paid with the estate tax return.
  3. The proposal provides for each person or decedent to be able to exclude $1 million from this tax.
  4. Transfers to charity are excluded.
  5. The $250,000 per person exclusion for capital gains on the transfer of a personal residence will apply.
  6. The exclusions from taxes allowed for sales or transfers of small business stock would apply.
  7. Partial interest discounts would no longer be available for the valuation of property transferred.
  8. The assets transferred would receive a step up in basis to the extent that the transferred asset was subject to tax. Otherwise, property transferred would be required to carry over the donor’s or decedents basis.
  9. The proposal includes the deferral of the tax in the case of a transfer of a family business until it is transferred or sold to non- family members and for a 15-year payment plan of the tax in case of a transfer of certain non-liquid assets.

It is not yet clear when, or how many of, these proposals will be enacted.  We will continue to provide updates as information becomes available. Contact us at or (408) 287-7911 with questions or for assistance.