## Claim
Although my proficiency in Japanese is somewhat limited, this claim appears so extraordinary that I suspect a misunderstanding.
It is claimed that heirs could pay more in taxes than the total value of their inherited wealth.
[An accounting firm’s blog post](https://fasio.biz/archives/2203) seems to have initiated this rumor, suggesting such a scenario is possible.
Subsequently, [a blogger](https://defire.jp/inheritance-tax-of-crypto/) sought confirmation from the NTA (National Tax Agency), which confirmed it.
I would have ignored those claims if only those two sources weren’t from people who should know what they talk about.
I’ll attempt to summarize these sources to the best of my understanding.
## Summary
The assertion is that if an heir inherits cryptocurrency assets with significant unrealized gains, they would be subject to a 55% inheritance tax. (as expected)
To pay this tax, they might need to sell the cryptocurrency at the deceased’s cost basis, which implies another 55% tax. Consequently, 55% plus 55% equals 110%.
## The flaws
Several aspects of this claim are puzzling.
Firstly, I’m unaware of any asset, in any country, where the deceased is taxed on unrealized gains. Is there a specific NTA regulation targeting only cryptocurrency assets?
Secondly, if unrealized gains are taxable, it would logically precede the inheritance tax, as the unrealized gains belong to the deceased. Hence, the maximum total tax should be 75%, not 110%.
Thirdly, the claim suggests inheritance tax is applied first, followed by the sale of assets at the deceased’s cost basis. This is illogical, as the cost basis for any asset is always the value at the time of inheritance. Why would cryptocurrency be an exception? I never heard about an “inheritable cost basis”.
In conclusion, these claims seem erroneous. Likely, only the 55% inheritance tax is applicable, and any cryptocurrency sold by the heir would be based on the cost basis at the time of inheritance (i.e., 0% if sold immediately upon receipt).
by NicolasDorier