pk
Level 15
Level 15

Deductions & credits

@ParkNYC , while I find @Opus 17  reply to you very complete, correct and to the point, I have to disagree  on a minor point  -- stepped up basis

(a) it is the decedent's estate that gets the stepped up/ down basis --  he/she had a basis in the property  and therefore  the basis adjustment to FMV is applied to his/her assets before or at the time of transfer to the estate  ( the estate comes into being at the time of the demise of the decedent).  Thus the adjustment to his/her basis  is available to the estate  and before transfer to the inheritors. So in a sense the inheritors  get the advantage of the basis  adjustment.

(b) Since the inheritor had no basis in the property  -- unless co-owned  ( which is whole another kettle of fish ),  basis adjustment cannot apply.

Another point that concerns me here -- you keep talking about gift.  A gift can only occur while the donor is alive  -- it become an inheritance , even if the decedent  wrote in his will -- "I gift this asset  to XXXX", it is still an inheritance if affected after the death of the decedent.  I recognize that the form 3550 does cover both  gifts and inheritances  --- these are not taxable items  but IRS wants to  establish & track the basis , especially  from foreign persons to a US person.

 

Is there more I can do for you ?