Step-Up in Basis

Step-Up in Basis

by Richard C. Wilson & Family Offices Group Association Team

Family Office Definition: Step-Up in Basis

Step-Up in Basis definition:  The basis is used to determine the amount of taxable appreciation in property when sold. Generally, assets that are inherited are “stepped up” in basis at the date of death.  For example, a stock is purchased in 1988 and inherited in 2008. The heir’s cost basis in the stock is the value in 2008.  The heir is only responsible for paying taxes on capital gains made from the date of death to when the stock is sold at some point in the future. The gains made between 1988 and 2008 are not included in any calculation of capital gains.

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