The STEP (Sensible Taxation and Equity Promotion) Act

The STEP (Sensible Taxation and Equity Promotion) Act

 Who: Senators Van Hollen, Booker, Sanders, Whitehouse, and Warren; Representative Pascrell

 Effective January 1, 2021

Tax unrealized gains upon transfer by gift or at death

-       Would not apply to transfers to US citizen/long-term resident spouses, charities, charitable trusts, qualified disability trusts and cemetery trusts

-       $1,000,000 of exclusion (adjusted for inflation), $100,000 of which is available during life

Taxation of assets in non-grantor trusts every 21 years

-       Transition rule for trusts established in or before 2005 – first tax due in 2026

 Deferral over a 15-year period available for tax on gains other than actively traded assets, that are transferred at death or taxed at 21 years

 Would add reporting requirement for trusts with more than $1M in assets or $20,000 in income to report balance sheet, income statement, trustees, grantors and beneficiaries, including “a full and complete accounting of all trust activities and operations for the year