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The primary purpose for the stepped-up basis rule under IRC § 1014 is so that, for estates without exemptions to the federal government's estate tax on transfers of wealth at death, the estate's assets are taxed only by estate taxes and not also on the capital gains during the decedent's lifetime.
Sale price ($500,000) - Stepped-up original cost basis ($500,000) = $0.00 taxable capital gains On the other hand say that you hold the house for a year, during which time the price of this house ...
Stepped-up basis is a tax provision that allows heirs to reduce their capital gains taxes. When someone inherits property and investments, the IRS resets the market value of these assets to their ...
Under the stepped-up basis rule, [8] for an individual who inherits a capital asset, the cost basis is "stepped up" to its fair market value of the property at the time of the inheritance. When eventually sold, the capital gain or loss is only the difference in value from this stepped-up basis.
As inherited assets are automatically revalued to their current or "stepped-up" basis, any capital gains are permanently exempted from taxation. Family farms and small businesses could qualify for an exemption of $1.3 million, effective 1998. Starting in 1999, the $10,000 annual gift tax exclusion was to be corrected for inflation.
Rich would receive a step-up in basis and wouldn’t owe taxes on any of the previous gains. However, that would leave the $13.3 million in assets in Loretta’s estate, potentially triggering ...
The estate tax was reinstated in 2011 with a further increased cap of $5 million for individuals and $10 million for couples filing jointly and a reduced rate of 35%. The "step-up basis" of estate tax law allows a recipient of an estate or portion of an estate to have a tax basis in the property equal to the market value of the property.
Whether you inherited the stocks through a brokerage, will or trust, calculating the cost-basis stays the same. However, the stepped-up rule only applies to inherited stocks (and other financial ...