The deceased owner’s step up value will be put in the estate tax. E.g., the purchase value was $100G and the FMV at the death was 200G. For 90/10 ratio 180G will be claimed in estate tax (skip the exemption here).
If F gave S 40G as a gift and claimed the gift tax. At the death only 100G was claimed in the the estate tax. From IRS perspective, he/she doesn’t lose anything.
