Deductions & credits

Thanks dmertz

I think you are agreeing that the step up would apply to the gains beyond the NUA??

You stated.. Would the addition of the bold text be correct?

Gains after the stock is distributed from the plan are ordinary appreciation, not deferred income, so the cost basis to the surviving spouse in a community property state should be stepped up to the value of the stock as of the date of the spouse 's death minus the NUA.