Stepped-down Basis
Likewise, under ยง 1014(a), if a decedent's adjusted basis in property is higher than the fair market value, the beneficiary's basis will equal the fair market value of the property at the time the decedent dies. For example, Decedent owns a yacht whose adjusted basis is $150,000, but at the time of her death, the fair market value of the yacht is only $110,000. The beneficiary's basis in the yacht will be the fair market value, $110,000.
Read more about this topic: Stepped-up Basis
Famous quotes containing the word basis:
“Protoplasm, simple or nucleated, is the formal basis of all life. It is the clay of the potter: which, bake it and paint it as he will, remains clay, separated by artifice, and not by nature from the commonest brick or sun-dried clod.”
—Thomas Henry Huxley (1825–1895)