July 20, 2021

2021 – 07/20 – There’s currently a “stepped-up basis” if you inherit property — but will it last?

If you’re planning your estate, or you’ve inherited assets, you may not know the “basis” for tax purposes. Under the current rules (known as the “step-up” rules), an heir receives a basis in inherited property equal to its date-of-death value. For example, if your grandmother paid $500 for stock in 1935 and it’s worth $1 million at her death, the basis is stepped up to $1 million for your grandmother’s heirs, and that gain escapes federal income tax. Be aware that President Biden has proposed ending the ability to step-up the basis for gains exceeding $1 million (with exemptions for farms and family businesses).