That is correct. The value of the stock at the date of death. You can still choose $0 cost basis if you don't mind donating to the government. However, the government would most likely prefer to have your taxes be correct so that if the stocks are moved around some more the basis will be accurate.
The cost basis of inherited stock is generally the market price of the stock on the date that the benefactor died.
In rare cases, the executor of the estate will make a special election to treat the stock differently. Check with the executor to be sure.
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