The problem with the above post is that it confuses the fair market value of the property at the date of death with the increase in value on the date of death.
The stepped-up basis would, of course, be the fair market value as of the date of death, not only the increase in value. Therefore, the stepped up basis would be $55,000 ($150,000 - $40,000 (land value) = $110,000 (building value) divided by 2), not $20,000 ($25,000 less $5,000 allocated to land).
