A step-up in basis resets the cost basis of an inherited asset from its purchase (or prior inheritance) price to the asset's highermarket valueon the date of the owner's death.4 For example, let's suppose Jane purchases a share of stock at $2 and dies when its market price is $15...
The step-up basis is important because the beneficiary will need to report any capital gain or loss when the asset is ultimately sold. For example, if the beneficiary inherits 1,000 shares of stock from an uncle purchased at $5 per share, which is valued upon the uncle’s death at $20...
The carryover basis differs from astep-up basis. A carryover basis is used during the lifetime of the giver, while a step-up basis is used when an asset is inherited after the giver passes away. In a step-up basis scenario, the value of the assets being transferred is adjusted to it...
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plannersgenerallyadvisetheirolderclientstodefersalesofsubstantiallyappreciatedassetsinorder toallowasurvivingspousetoinheritsuchassets(withouttaxbecauseofthemaritaldeduction),to takeanewincometaxbasis,andthentosellthemwithoutpayinganycapitalgainstax.Iftheexisting step-upinbasisformeasuringtaxablecapitalgainsisreplacedwith...