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Briefly Noted

Step-Up Value and Inherited Assets

In last month’s Briefly Noted discussion about the lack of an estate tax, we made an error in discussing the tax basis for selling inherited assets [“The Lack of an Estate Tax,” April 2010 AAII Journal]. Specifically, we said that “inherited property is not ‘stepped-up.’” That was not completely correct.

If property is inherited in 2010 and subsequently sold, the tax basis for calculating any gain is based on two numbers. The first is the price paid by the deceased. The second is a step-up value of $1.3 million. (Surviving spouses are eligible for an additional $3 million, bringing the total step-up value to $4.3 million.)

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