A higher, increased tax value of property given as the result of most sales or taxable transfers. The tax basis is used in computing capital gains and losses on the transfer of property. Back to the Top
When the value of property you own is higher on the day you die than when you bought it, the "basis" of that property increases. This is used for taxes. If the value of that property dropped since you bought it, the estate can get a "stepped down" basis.
the higher income tax basis that becomes available to an heir following the death of the former property owner, equal to the fair market value of the property on the date of death (or alternate valuation date) as finally determined for federal estate tax purposes; stepped-up basis is scheduled to be repealed for one year in 2010, coinciding with the one-year repeal of the federal estate tax
The recognition of a new cost basis value because of some defining event, e.g., the inheritance of stock from a deceased individual.
The tax basis of appreciated property received due to the death of the decedent is “stepped up†to the market value of the property at the decedentâ€(tm)s death. The result is substantial tax savings upon the subsequent sale of the appreciated property.
an income tax term used to describe a change in the adjusted tax basis of property, allowed for certain transactions. The old basis is increased to market value upon inheritance, as opposed to a carry-over basis in the event of a tax-free exchange. Example: Dooley dies, leaving land worth $100,000. The land was purchased for $20,000, but the heirs receive a stepped-up basis to the fair-market value at death. The $80,000 unrealized gain to Dooley escapes capital gains tax.
Basis for heirs who acquire property by inheritance, which is the fair market value of the property at the time of death.
The usual basis of property received by an estate beneficiary from the estate. The value of the property for estate tax purposes is the fair market value on the date of death of the decedent or, alternatively, the value six months after the date of death (the alternate valuation date), if elected. Such a basis is not necessarily stepped-up if this value is less than the property's basis in the hands of the decedent.
When property is inherited or passed through a trust or will, the person who inherits that property usually receives a new basis in the property. The new basis is the value of the property at the date of the owner's death. Since property generally appreciates, this is known as stepped-up basis. It usually saves taxation on the gain or profit from a later sale of the asset. However, if you pass away with property you were holding at a loss, your heirs cannot claim the loss and get the disadvantage of a “stepped-down” basis. Note that this rule may change in 2010 due to the 2001 Tax Act.
Assets are given a new basis when transferred by inheritance (through a will or trust) and are re-valued as of the date of the ownerâ€(tm)s death. If an asset has appreciated above its basis (what the owner paid for it), the new basis is called a stepped-up basis. A stepped-up basis can save a considerable amount in capital gains tax when an asset is later sold by the new owner. Also see "Basis."
This is the increase in tax cost (basis) in the hands of a new owner of property, such as stepped-up basis for property you inherit. For example, assume that your rich uncle died and left you Blackacre, property which he acquired for $100. If at the time of his death the property was worth $50,000, that is your new stepped-up basis. If you sell Blackacre for $50,000, you will have no taxable gain.
Assets acquired by inheritance take as their basis the fair market value of the asset on the valuation date. This value generally is greater than the basis of the asset in the hands of the deceased, resulting in a “step-up” in basis in passing the asset from the deceased to the person inheriting it. Also see “Basis” and ‘Valuation date.
The rule that makes an heir's cost basis equal to the value of the asset at the date of the grantor's death - or, alternatively, six months later - rather than its original cost. If a gift of an appreciated asset is made during the donor's lifetime, the donee takes the donor's original cost basis and there is no step-up in the basis. The step-up avoids a capital-gains tax on the appreciation that occurred during the donor's lifetime. The step-up rule is scheduled to end in 2010, but could be brought back the following year by the Sunset provision of the Tax Relief Act of 2001.
For tax purposes, a value that is used to determine profit or loss when property is sold. If someone inherits property that has increased in value since the deceased person acquired it, the tax basis of the new owner is "stepped-up" to the market value of the property at the time of death. The stepped-up basis means that when the property is eventually sold, there will be less taxable gain.
An increase in the income tax basis of a property that is a result of a tax-free exchange. As a result of an inheritance, for example, the basis of the inherited property was stepped up to its current market value.
