Retirement accounts are not eligible for a step-up in basis. The taxable amount of retirement distributions is instead treated as Income in Respect of a Decedent (IRD) and is taxable to the beneficiary. Enter the Form 1099-R as received.
If the decedent's estate paid estate taxes, you are generally eligible for a deduction on Schedule A line 16 of your individual tax return based on the amount of your share of the estate tax paid by the estate and the amount of IRD that you received.
