when do assets get a step up in basis
Stepped-up basis One possible explanation for the stepped-up basis rule under IRC ยง 1014 is to avoid the difficulty of ascertaining a decedent's adjusted basis in property that could have been held for decades.[4] A second theory is that a decedent is not likely trying to evade taxes by passing property at death, so mandating carryover basis, which would preserve the gain in the beneficiary, is unnecessary.[5] Third, the federal government imposes estate taxes on transfers of wealth at death based on those assets values as of that date.[6] Were no step up in basis allowed, the federal government could potentially receive a windfall from estates subject to estate tax by recovering federal estate tax based on capital assets' values as of a decedent's date of death, while also receiving capital gains tax when such assets are sold by an estate or a beneficiary based on the difference between the value of the asset when sold and the price at which such asset was purchased by a decedent.