Obama's new plan: Dad buys a house for $10,000. He dies and leaves it to you. The fair market value on the date of death is $100,000. You sell it for $120,000. Under current law, you have a capital gain of $20,000 (sales price of $120,000 less step up in basis of $100,000). Under the Obama plan, you have a capital gain of $110,000 (sales price of $120,000 less original basis of $10,000). If you are going to hold an estate liable for tax, you can't then hold the estate liable for tax again when the inheritor sells it. It's a huge tax hike on family farms and small businesses.