A recent report conducted by the Economic Research Service of the U.S. Department of Agriculture has estimated the impact of AFP tax proposals on family farmers and ranchers.
The proposed changes in AFP would make accumulated gains (in asset value) subject to capital gains taxation at death whereas—under current law—these gains can be passed on to heirs without being subject to capital gains taxation.
The authors of the report, Tia M. McDonald, Ron Durst, and Christine Whitt have outlined a method for assessing impacts of changes to capital gains taxation at death for family farm estates, an approach which accounts for the structural changes in a person’s wealth portfolio that often occurs as a person ages. The results suggest that of the estimated 32,174 family farm estates in 2021, 1.1 percent would owe capital gains taxes at death, 18.2 percent would not owe capital gains taxes at death but could have deferred tax liability if the farm assets do not remain family owned and operated, and 80.7 percent would have no change to their capital gains tax liability.
To learn more: USDA Economic Research Service
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