You're leading text supports....
The simple transfer of an asset from person A to person B, without any exchange of cash or other value, should be a tax free event. Taxes should only be imposed when the value is realized.
Is internally contradictory. The assest by it's nature of being an asset has value. The tax liability is being transferred by your notion. You can correct me if I'm wrong, but I don't think the tax liability is being transferred without an estate tax. I would find it a rather difficult [and unreasonable] task for the person receiving the asset to determine the cost basis. And it wasn't his cost basis to begin with.
But until the is entered for probate and an executor appointed, the stock couldn't be sold. And an executor would be very brave to sell the stock at that time. Might, in some states, need court permission, which takes time to get. It's likely the stock wouldn't have been sold during the decline. So now, the estate likely has a tax bill of in excess of $1 million, which takes every penny of remaining estate.
This is equitable??
It's equitable in the sense that it's a random draw. You can't predict whether an asset is going to increase or decrease in value.
Small businesses, farms, family homes are routinely lost because of the estate tax bill. In some cases it can be planned around, but that just means those without the means or savvy to do such planning, or in a case where the planning won't work, pay the bill for the others.
I've always wondered how people came up with that first sentence. How many businesses, etc., are routinely lost because of the estate tax bill on an annual basis? And what are the total number of businesses that go through the process. How do you know that it was a result of the estate tax bill and not an intended sale because the person receiving the asset preferred the cash?
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