Stock portfolio jointly owned married couple,spouse dies, how decide which stocks “belonged” To dead for basis step up at death? If not how to step up the basis halfway?

[MomIsACPA]

Huge appreciation on jointly owned stock and mutual fund portfolio. How allocate the stepped up basis to half the portfolio when survivor sells just some of the stocks?

[DDollar · Accepted solution]

You don't allocate the step-up to select holdings, you apply it to all holdings.  The formula is (Date-of-death fair market value + Old basis) / 2 = New Basis)  For instance, if you owned stock XYZ worth $5,000 at the time of your wife's death, and your basis was $1,000, you new basis is $6,000 / 2 = $3,000.