Understanding Stepped-Up Basis: Impact on Inheritance and Taxation
What is Stepped-Up Basis?
Stepped-up basis is an income tax concept that refers to the adjustment of the tax basis of an inherited property to its fair market value at the date of the decedent’s death. This adjustment is crucial as it can significantly reduce the capital gains tax that the heirs might owe when they eventually sell the inherited property.
How Does Stepped-Up Basis Work?
When an individual inherits property, they receive a
Related Terms: Adjusted Tax Basis, Fair Market Value, Capital Gains Tax, Inheritance Tax, Tax-Free Exchange.
