Taxation on inheritance of assets for California/community property resident

Suppose two spouses have a joint tenant (wros) brokerage account in California (community property state),

when one spouse passes away, will the surviving spouse receive a 100% or 50% cost basis adjustment

for the account's assets?

And if both spouses pass away, will the designated beneficiary receive any cost basis adjustment of the assets?

Thanks

357

Employee Tax Expert

Sep 28, 2022 12:38:11 PM

Yes, in a community property states upon the passing of a spouse. Federal tax code section 1014(b)(6) provides that community property assets step up 100% in basis if not an inheritance or gift. Assuming you did not inherit the securities or receive them as a gift, they are community property.

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Taxation on inheritance of assets for California/community property resident