GLOSSARY · TAX & ESTATE
Step-up in basis
Property inherited at death takes a new cost basis equal to its market value on the date of death, so the gain built up during the owner's life is never taxed as a capital gain. Property received as a gift during life keeps the giver's original basis instead. Traditional retirement accounts do not get a step-up; their withdrawals are taxed as income to the heir.
Also called: stepped-up basis, basis step-up at death, basis at death, carryover basis
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CHAPTER · WEALTH PROTECTION FUNDAMENTALS · FOUNDATIONSHow You Title AssetsCHAPTER · WEALTH PROTECTION FUNDAMENTALS · FOUNDATIONSTrusts for Larger EstatesRELATED TERMS
SOURCES
- Publication 551, Basis of Assets. Internal Revenue Service.