The adjusted basis to the recipient of property bequeathed by a decedent generally is which of the following?
A)Fair market value on the valuation date of the decedent's estate
B)Adjusted basis to the decedent on the valuation date of his or her estate
C)Fair market value on the valuation date of the decedent's estate, less estate taxes paid on the transfer
D)Adjusted basis to the decedent on the valuation date of his or her estate, plus estate taxes paid on the transfer

Question

Quizplus · Accepted Answer

The adjusted basis to the recipient of property bequeathed by a decedent is generally the fair market value on the valuation date of the decedent's estate. This is known as the "step-up" in basis rule, which allows the basis of property to be adjusted to its fair market value at the time of the decedent's death, potentially reducing capital gains taxes if the property is sold by the heir.

The Adjusted Basis to the Recipient of Property Bequeathed by a Decedent