Abstract:
In “Carryover Basis: The Case for Repeal,” Marvin Blum presents a critique of Section 1023 of the Internal Revenue Code, the so-called “carryover” basis provision. The note argues that section 1023 invites and deserves the harsh criticism that it receives. Blum furthers argues that in order to revive tax payer respect and support, section 1023 should be repealed and there should be a return to the step-up basis. In doing so, Blum focuses on the disastrous side effects of carryover basis and argues that implementation of that system has not and cannot achieve the broader policy goals envisioned in the Tax Reform Act of 1976. Blum concludes by comparing five alternative methods of basis determination against both carryover and step-up basis arguing that the step-up basis should be retained due to its certainty and simplicity.