medium · Certified Financial Planner Retirement
The Ainsley household is choosing between gifting 500,000 of appreciated stock now or leaving it to their heirs at death.
What is the primary tax difference between these two transfer methods?
- Both methods result in a basis step-up to the higher of cost or FMV.
- Gifts carry over the donor’s basis, while assets transferred at death receive a basis step-up to FMV.
- Gifts receive a basis step-up to FMV, while assets transferred at death carry over the donor’s basis.
- Gifts within three years of death are automatically stepped-up to the donor's basis.
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