Income Tax Basis Rule Changes for 2010
Back in 2001 Congress enacted legislation that would suspend the federal estate tax for 2010. As part of the law suspending the federal estate tax, Congress also changed the way in which the income tax basis is calculated upon a property owner’s death. Under pre-2012 law, a beneficiary would not recognize any gain on an immediate sale of inherited property as the income tax basis in such property would be “stepped-up” to the fair market value of the property including a decedent’s estate as of a decedent’s date of death. For decedent’s dying in 2010, Congress has replaced the step-up basis rules with the “carry-over” basis rules.