Generally if you receive property through an inheritance and the value of the property was claimed in the decedent’s estate you receive a step up in basis? So what does this mean? What is a step up in basis? Generally, a step up in basis means that you take the property with a basis at the fair market value as of the date of death as opposed to a carryover basis. This can be beneficial because if or when you sell the asset or property, with a higher basis you should have less of a gain, and thus less tax. A step up in basis is different than a carry over basis whereby you take the property with basis that was the adjusted basis in the hands of the donor prior to the gift being made. Certain assets, such as IRD assets (income in respect of decedent) may not get a step up in basis.
Please remember that the information within this article and video is for informational purposes. You should always consult your tax attorney or estate planning attorney regarding matters relating to gifting property and transferring property at death, and the tax and estate implications. You can speak with a Denver tax attorney and estate planning attorney by contacting The McGuire Law Firm.