Closing asset loophole can raise $100 billion in taxes, US Treasury now says

From the article:

Months after saying it expects to collect at least $50 billion over the next decade by stopping large business partnerships from manipulating the taxable value of assets or depreciating the same assets repeatedly for tax deductions, the Treasury Department has quietly updated its forecast to more than $100 billion.

The IRS’s pledge to go after the practice known as “basis shifting” has made waves among accountants for the largest and most complex business partnerships. Some of them say that the true amount of taxes avoided far dwarfs even the $100 billion figure, though the IRS is unlikely to ever find anywhere close to all of the money.

“The IRS announcements this summer were like a shot across the bow: We’re onto you, and if you try this, the IRS is going to litigate,” said Eric Solomon, a former assistant treasury secretary for tax policy who now works as a tax attorney in private practice. “Deterrence by itself increases revenue.”

…

Basis shifting allows complex partnership businesses to shift the value of certain assets, such as land or machinery, by moving assets from one business to another one that are linked entities. The moves can allow the partnership to depreciate the same asset over and over again in some cases, greatly reducing tax bills.

Lawyers and accountants for the partnerships say it is legal, and that Congress could pass a ban if lawmakers want to stop the practice. Biden administration officials view basis shifting for the sole purpose of reducing tax bills as illegal, citing a rule known as the “economic substance doctrine” that says the transactions must have a purpose other than just avoiding taxes.

For individuals, the step-up in basis from inheritance seems pretty similar. I guess businesses can play that game too.