What it is, apparently, is if your parents (say) bought a bunch of IBM stock in the 60s (say), when you inherit the stock certificates, you pay taxes on today's value of the stocks even if you don't sell them. (Right?) Which to me sounds like bullshit. Do you pay again when you sell them?

Right, and you pay the capital gains when you sell them. I.e., I buy a stock for $60K. I die and you get the stock, now worth $300K. You pay estate taxes on $300K. You later sell them for $450K. You then pay cap gains tax on $150K.

Without the estate tax I think you would pay taxes on 450K-60K, or 390K, when the stock is eventually sold.

1. Gifts are not taxable until they reach a certain amount because, double dipping ($11,000/yr).

I thought that inherited income (however we're defining that--houses, cars, piles of gold doubloons) wasn't taxed until it reached a million.

Gifts are not inherited income as far as the tax law is concerned; it applies to gifts while the giver is still living.

I buy a stock for $60K. I die and you get the stock, now worth $300K. You pay estate taxes on $300K.

Inheriting is expensive, especially if the market crashes the day after you pay tax.

You pay estate taxes on $300K. You later sell them for $450K. You then pay cap gains tax on $150K.

Oh, OK. That's not as bad as I thought.

Randomly, I am extremely pleased with my current ability to understand this stuff.

Oh, and in other taxable news, prizes are totally taxed, so don't go on The Price Is Right and win a car if you're broke.

As I understand it, if I win a Ferrari on a game show, that's seen as taxable income.

Yes, and this also seems odd to me. But the unrealized gains thing moreso. Say you inherit a car that th deceased bought new for some fairly trivial amount of money but kept in pristine condition and pased on to you, who would like to keep it for the sentimental value of thinking of all the love and care deceased person lavished on it. But it's now worth $2 million and you don't have the cash to pay the taxes. I can see where that would upset people.

Gifts are not inherited income as far as the tax law is concerned; it applies to gifts while the giver is still living.

Right. And I was saying that gifts above a certain amount are taxed ($11,000 is it?) and inherited inccome above a certain amount is taxed, (I think someone mentioned a million dollar limit, but I wouldn't swear to it). Since I figure an inheritence is just a gift you get when the giver is beyond having a use for it, I'm not seeing the difference an estate tax makes, aside from lower exempted amounts for gifts from live folks.

Oh, and in other taxable news, prizes are totally taxed, so don't go on The Price Is Right and win a car if you're broke.

This came up on Mayberry RFD when Aunt Bea won a washing machine.

Oh, and in other taxable news, prizes are totally taxed, so don't go on The Price Is Right and win a car if you're broke.

Unless you're Canadian, because Windfalls aren't taxed. But if I won a car on TPIR, I get killed on the duty to bring it into the country.