you get a stepped up basis after the benefactor dies.
you get a stepped up basis after the benefactor dies.
when do you get a stepped up basis?
after the benefactor dies
stepped-up basis









































under internal revenue code § 1014(a), when a person (the beneficiary) receives an asset from a giver (the benefactor) after the benefactor dies, the asset often receives a stepped-up basis, which is its market value at the time the benefactor dies. a stepped-up basis is often much higher than the before-death cost basis, which is primarily the benefactor's purchase price for the asset. because taxable capital-gain income is the selling price minus the basis, a high stepped-up basis can greatly reduce the beneficiary's taxable capital-gain income when the beneficiary sells the inherited asset. 









































section::::general rule.
stepped-up basis
see the explanation under "rationale for stepped-up basis" (below) for an explanation of why the tax code would do this.









































section::::stepped-down basis.









































likewise, under § 1014(a), if a benefactor's adjusted basis in property is higher than the fair market value, the beneficiary's basis will equal the fair market value of the property at the time the benefactor dies. for example, benefactor owns a yacht whose adjusted basis is $150,000, but at the time of benefactor's death, the fair market value of the yacht is only $110,000. the beneficiary's basis in the yacht will be the fair market value, $110,000.
stepped-up basis