Basis to estate

[gman]

Taxpayer dies and son files estate return. Stock is sold and reported on form 1041 within
5 months of death. Stock recieves a stepped up basis, right??

[JG EA]

Yes with exceptions

Pub 559 says the following:

Basis of Inherited Property
Your basis in property you inherit from a decedent is generally one of the following:

The fair market value (FMV) of the property at the date of the individual's death;

The FMV on the alternate valuation date (discussed in the instructions for Form 706), if so elected by the personal representative for the estate;

The value under the special-use valuation method for real property used in farming or other closely held business (see Special-use valuation, later), if so elected by the personal representative; or

The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement (discussed in the instructions for Form 706).


Exception for appreciated property. If you or your spouse gave appreciated property to an individual during the 1-year period ending on the date of that individual's death and you (or your spouse) later acquired the same property from the decedent, your basis in the property is the same as the decedent's adjusted basis immediately before death. Basis of Inherited Property

Another exception:

Scorporation stock. The basis of inherited S corporation stock must be reduced if there is income in respect of a decedent attributable to that stock.

Oops, saw this was already answered in another post.