Client inherrited business assets.. Step up?

[Unregistered]

I have a client that inherited, 3 years ago, a house (that he has used as his primary residence for 3 years), building (used for business), land (used for business), automobile recyclers license ("junk yard"), and inventory. He is now selling everything. Does he get a step up in basis of the business use assets?

Thanks in advance.

[Y2KEA]

If the assets were owned by the corporation, the corporation didn't die, the owner did. No step up.

[jainen]

No

>>Does he get a step up in basis<<

No, not at this time. Any step-up would have happened three years ago, on the date of death. The kind of assets you describe could just as well had a step-down in basis. Either way, you will have to get them appraised for FMV as of the date of death. Those figures will be further reduced by depreciation allowed or allowable and (for the inventory) COGS.

[Unregistered]

>>Does he get a step up in basis<<

No, not at this time. Any step-up would have happened three years ago, on the date of death. The kind of assets you describe could just as well had a step-down in basis. Either way, you will have to get them appraised for FMV as of the date of death. Those figures will be further reduced by depreciation allowed or allowable and (for the inventory) COGS.

I meant were they allowed (at DOD) a step up in basis for the business assets. The assets were not held in a Corporation. The income and expenses were always reported on Schedule C. I just didn't know if the fact the assets were used in a business would proclude him from receiving a step up (or down) at DOD. I also was uncertain as to how prior depreciation would play into this scenario.

Thanks again for everyones input.

[Bill Tubbs]

FMV at DOD

Since assets were the personal assets of the guy that died, it does not matter what they were used for -- whether they were personal or a Sch C item -- and doesn't matter whether or not there had been any depreciation.

Your client's basis is the FMV at DOD, period. And the only depreciation your client concern himself with is the amount of depreciation taken since the date of inheritance. Hopefully a new depreciation schedule was put together at inheritance.

Bill