Transformational Wealth: How a Step-Up in Basis Helped Our Clients Retire Without High Tax Costs ![Tax Attorney Sacramento John Goralka]()
By, John M. Goralka
Sacramento, CA
Our clients holding income-producing real estate valued at approximately $12 million received a step-up in income tax basis upon the death of their mother.
During their mother's lifetime, the real property was transferred to an Upstream Basis Trust. This trust is designed to provide a basis step-up by including the property in the mother's estate for estate tax purposes. A basis step-up means that the properties can now be sold with virtually no capital gains tax. For properties that are not sold, the depreciable basis is increased to the fair market value as of the date of death, resulting in higher depreciation deductions and an increased return on investment.
The clients were actively involved in managing these properties. This allows them to retire from property management activities without incurring high tax costs upon the sale of the properties. This is a transformational change for these clients, as they can now improve their daily enjoyment of life. Previously, they did not see a way to retire without facing significant tax costs, which could have been one-third or more of the property value in California and federal income tax on the sale proceeds.
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Sacramento Estate Planning, Tax Planning and Business Attorney.
I’m John Goralka, a Sacramento Estate Planning, Tax Planning and Business Attorney at the Goralka Law Firm, P.C. If you have an estate, tax or business situation needing legal help, contact our team for experienced and friendly advice. You can contact us at 916-440-8036. Alternatively, you can use our convenient online contact form here on our website. We listen, and you can have your questions answered, your case evaluated, and explore your options for getting the legal help you need.
There are almost 200,000 attorneys in the state of California, and fewer than 100 of those attorneys are State Bar Specialists in Estate Planning, Trusts and Probate and State Bar Specialists in Taxation. I am one of the few attorneys with both critical specializations. I passed the California CPA examination and am a former income tax auditor and hearing officer. I am also recognized as a top attorney in the United States by US News and World Reports and by Best Lawyers and hold an AV rating from Martindale which is the premiere rating organization for attorneys. The AV rating is the highest possible rating for legal experience and for legal ethics.
For help in Sacramento with estate planning, business planning or tax planning, please contact our office.
