If a deceased person's home is sold at a profit and proceeds go to beneficiaries, does house get a steped-up basis for tax purposes?

[radlaw]

The house was designated in the will that upon the owner's death, it be sold and proceeds distributed to beneficiaries. Some beneficiaries lived in the house for a year. The house was then sold and beneficiaries moved. Since the house was NOT inherited; but sold at a profit, does the house get a stepped-up basis for the estate tax filing and capital gains taxes paid on the profit, or does it still get a stepped up basis. Also what are the tax ramifications for the beneficiaries under each scenario, inheriting the funds vs inheriting the house?

[MarilynG · Accepted solution]

Yes, you can use the stepped-up basis in figuring the gain on the decedent's property sale for the estate tax return. 

The beneficiaries receive a K-1 from the estate to report on their personal tax returns.

Here's some info that may help you:

https://ttlc.intuit.com/replies/5610660