IRS Revenue Ruling 69-297 indicates that NUA of stock inherited by a beneficiary does not receive a step-up in basis because it is considered to be deferred income. This means that the NUA is treated the same as if it had never been distributed from the employer plan and except that when the the stock is sold the NUA is taxed at long-term capital gains rates instead of, when distributed from the employer plan, as ordinary income. In either case it's treated as income in respect of a decedent.
