Explaining: Stepped-up Basis

Many of America’s ranching families have been working their land for generations, and hope that their children and grandchildren will carry on the tradition. Tax policies like stepped-up basis help make their dreams a reality.

Stepped-up basis moves the base value for assessing taxes on a deceased family members’ property up to the fair market value at time of death. If Congress is serious about protecting family farms and ranches, they should recognize the unique needs of agricultural producers and keep this critical provision. Assets in agriculture are typically held by one owner for several decades. Resetting the base value of the land, equipment and livestock on the date of the owner’s death (i.e., using a step-up in basis) is critical for surviving family members who hope to keep the operation intact. Discontinuing this practice has the potential to create massive tax liability for the heirs when they ultimately upgrade or transfer these assets as part of their business operations.

The Bottom Line:

While comprehensive tax reform has the potential to deliver significant benefits to our nation’s farmers and ranchers, it is equally important that legislation preserves important provisions which support family-owned operations. NCBA supports reducing taxes for the next generation of cattle producers by maintaining stepped-up basis.

Why it Matters

  • Stepped-up basis helps keep family ranches intact and supports the next generation of ranchers
  • Removing stepped-up basis would cause massive tax liabilities for family-owned farms and ranches, damaging the economic vibrancy of rural communities

Stepped-up basis seems like a foreign concept and a lot of people don’t understand what it is. But what our elected representatives need to understand is that stepped-up basis impacts virtually every operation at the time of a death, whether it is a very small producer or a large producer. Doing away with stepped-up basis would be devastating on the farming and ranching community.

  • For more information, please contact the
    National Cattlemen’s Beef Association.

    Ed Frank at 202-879-9125
    Max Moncaster at 202-879-9124

    1275 Pennsylvania Avenue NW
    Suite 801
    Washington, DC. 20004