Step U basis

[2floridians]

Can anyone tell me about step up basis, how it works and where I can read about it. thanks

[michaelmars]

oy, ok i'll take a stab at it while i sip a cup of coffee. there are basically 2, either a stock step up or a real estate step up. stock step up incurrs when you inherit stock. the beneficiary gets a step up in basis to fmv at date of death thus if sold the next day the gain is zero. if a spouse dies and the stock was held joint, 1/2 of it gets the step up. the other 1/2 retains the original basis. ok that was the easy part now comes real estate

real estate likewise gets stepped up but not just if inherited but if purchased, and not just directly but evenif you purchase a partnership interest when the partnership owns property. i buy out a partner for 100,000 his basis is 20,000 i get a step up of 80,000 which only i get to depreciate not the rest of the partners. [of course some of the 80m gets allocated to land and doesn't get depreciated] Now in the real world the partner i am buying would really have negative basis of -200,000 thus i get a step up of $300,000.

Got all that?

See 754 i know, just don't ask me about treasury stock

[LindaB]

Can anyone tell me about step up basis, how it works and where I can read about it. thanks

There should be some info in Pub. 551, Basis of Assets.

[Kea]

... if a spouse dies and the stock was held joint, 1/2 of it gets the step up. the other 1/2 retains the original basis. ok that was the easy part now comes real estate

One more complication. If they were in a community property state, and the stock was owned by the decedent or by both spouses, the whole basis gets stepped up. (Of course, if it was owned separately by the surviving spouse, no step up.)