u/Ind132

The title is from one of a number of news stories, all related to a Trump social media post. https://www.msn.com/en-us/news/other/trump-announces-90-checks-for-more-than-20m-seniors-to-help-combat-medicare-costs/ar-AA2dt24h

Billionaire will cover your spending.   The only catch is that you need a written plan to spend the entire $5 million.    What is your plan?

Definitions/rules:

You are two adults living together.  If you are single, the target is $4 million.

You are not friends, relatives, hangers-on, worthy causes.  B is funding consumer goods and services for two people. 

Use – Cinderella rule.  Everything disappears at midnight on 12/31.  You take away memories and photos.

Use – No credit for Stand-by or Supersize.   B will provide a condo in Hawaii and one in Vail (for example).   But, you can only live in one per day.  You get credit for that one. 

B will provide luxurious, roomy accommodations for two.  But, no six-room, seven-bath mansions.   Same rules for cars, planes, boats, etc.  If B can only locate something that is “too big”, he will pro-rate the cost down to “luxurious for two people”.

Enjoy – Be honest.  I could easily burn $5 million just flying private jets aimlessly.   But, after a few gee-whiz flights, I’m just sitting in a metal tube.  I’d rather be sitting on a beach in Tahiti or a mountainside in Switzerland. 

This isn’t “How can I waste $5 million?”  It is, “What’s on the top of my want list, that I’m not doing because it is too expensive?”

Other – no money for gambling, drugs, sex, or wanton destruction.   $365,000 cap on food and beverages. 

Note that $5 million/year is about $13,700/day or $416,000/month.

B will guarantee you can return to your job or similar if you want to quit work for a year to enjoy your $5 million credit card.

EDIT: Many commentors seem to be missing the Cinderella rule, and others the "not friends, relatives, ...".

Under current law, if I buy a stock for $100 and sell it for $160, I owe a capital gains tax on the $60.  

If I die soon after I sell, I won’t be around to pay the tax.  My executor is legally required to calculate and pay the tax for me.

OTOH, suppose I was planning to sell but died before I got that done.  Later, my executor or my heirs sell the stock.  In this case, the tax on the $60 simply disappears into the ether. My purchase price (cost basis) is “stepped up” to the market price on the day I died.  (I’m assuming $160)   Whoever sells the stock will use that $160 as their purchase price.  The $60 gain magically disappears from anybody’s tax liability.

This doesn’t make any sense to me.  I can’t think of any good tax policy reason. 

The only argument I’ve seen for this is practical.  Maybe the executor/heirs won’t be able to find the original cost.  But, when owners die just before death, and dies soon after, executors locate the price.   I’m sure this happens thousands of times each year and I’ve never heard of any major issues.

It’s easy to see why.   When I sell stocks through a broker or mutual funds, the gov’t requires that the broker or fund company send me a 1099.  For real estate, people keep good records and the county assessor keeps records.  That covers the big dollars.

I can see an issue for people who have small stamp collections.  Maybe they didn’t keep records.  A law eliminating step up could have a carve out for collectibles valued at less than $XX,XXX.  That would make sense to me.

It's just a gift to people lucky enough to inherit assets in the right circumstances.

Under current law, if I buy a stock for $100 and sell it for $160, I owe a capital gains tax on the $60.   If I die soon after I sell, I won’t be around to pay the tax.  My executor is legally required to calculate and pay the tax for me.

OTOH, suppose I was planning to sell but died before I got that done.  Later, my executor or my heirs sell the stock.  In this case, the tax on the $60 simply disappears into the ether. My purchase price (cost basis) is “stepped up” to the market price on the day I died.  (I’m assuming $160)   Whoever sells the stock will use that $160 as their purchase price.  The $60 gain magically disappears from anybody’s tax liability.

This doesn’t make any sense to me.  I can’t think of any good tax policy reason. 

The only argument I’ve seen for this is practical.  Maybe the executor/heirs won’t be able to find the original cost.  But, when the owner sells just before death, the executors locate the price.   I’m sure this happens thousands of times each year and I’ve never heard of any major issues.

It’s easy to see why.   When I sell stocks through a broker or mutual funds, the gov’t requires that the broker or fund company send me a 1099.  For real estate, people keep good records and the county assessor keeps records.

I can see an issue for people who have small collections, for example stamps.  Maybe they didn’t keep records.  A law eliminating step up could have a carve out for collectibles valued at less than $XX,XXX.  That would make sense to me. Otherwise, if I inherit the asset, I should inherit the tax position.