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Estate of Stahl v. Idaho State Tax Comm'n

Supreme Court of Idaho

August 24, 2017, Filed

Docket No. 43832, 2017 Opinion No. 93


 [*559]   [**137]  HORTON, Justice.

This appeal presents a narrow question of law relating to state income tax liability. Kathleen Krucker, personal representative of the Estate of Zippora Stahl, deceased ("the Estate"), appeals from the district court's grant of summary judgment in favor of the Idaho State Tax Commission ("Commission") and the district court's denial of the Estate's motion for reconsideration. The district court held that the Estate could not use a different figure as the starting point for calculating its Idaho taxable income for 2012 than it reported to the Internal Revenue Service for that year. We affirm.


Zippora Stahl was an Idaho resident who died in 2010. At the time of her death, Stahl owned real property located [***2]  in Chino, California that had substantially appreciated in value. An ancillary probate proceeding valued the Chino property at $16,000,000. In December of 2012, the Estate sold the Chino property for $16,339,000.1

A limited—and necessarily oversimplified—overview of income and estate tax law may be helpful in describing the context of the parties' dispute. For purposes of determining income tax liability arising from the  [**138]   [*560]  sale of property, a taxpayer's "basis" in the property is used to determine whether there has been a taxable gain and the amount of that gain. Broadly speaking, the taxpayer's basis is the original price paid for the property, subject to adjustment for items such as depreciation (downward) and capital improvements (upward).

For many years, the federal government has imposed taxes on the estates of U.S. citizens and residents. The estate tax is based upon the value of the property owned by the decedent at the time of death. Those who inherit property from the decedent take the property with a "stepped-up basis" for federal income tax purposes. Under Internal Revenue Code section 1014 (Section 1014), the recipient's basis is defined as "the fair market value of the property at the date of the decedent's death." The [***3]  underlying rationale for Section 1014 is to avoid double taxation; heirs' use of a stepped-up basis avoids imposition of both estate taxes and income taxes on the increased value of the property when it was sold by the heirs.

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162 Idaho 558 *; 401 P.3d 136 **; 2017 Ida. LEXIS 249 ***


Prior History:  [***1] Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Hon. Jason D. Scott, District Judge.

Disposition: The judgment of the district court is affirmed.


Election, repeal, taxable income, provisions, district court, income tax, first day, stepped-up, carryover, modified, subtitle, estate of decedent, federal estate tax, income tax return, estate tax, purposes, statutory interpretation, reconsideration motion, calculation, retroactive, taxpayers, refund

Civil Procedure, Summary Judgment, Entitlement as Matter of Law, Appropriateness, Appeals, Summary Judgment Review, Standards of Review, Standards of Review, De Novo Review, Questions of Fact & Law, Governments, Legislation, Interpretation, Tax Law, Income Taxes, Individuals, Estates & Trusts, General Overview, Federal Estate & Gift Taxes, Basis of Property, Expiration, Repeal & Suspension, Federal Tax Administration & Procedures, Interpretation of Federal Tax Statutes