Step-up in basis
Certified Financial Planner glossary · Certified Financial Planner
Definition
The adjustment of a decedent’s property to fair market value at death under Section 1014.
Step-up in basis in plain English
Heirs inherit appreciated stock that dad bought for pennies decades ago and wonder whether they inherit his tiny basis too. Step-up in basis adjusts a decedent's property to fair market value at death under Section 1014, so post-death gain often starts from that new FMV. Lifetime gifts generally carry over basis instead. Do not invent a step-up for gifted property during life, and remember that income in respect of a decedent items are a different story.
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