If a man owns valuable stock in a Personal Holding Corp with a near zero basis, he can save estate tax if his children inherit the stock, compared to liquidating the company and having them inherit the proceeds. Right? But if his wife is the only heir, it won't matter one way or the other, since there is no estate tax either way. Her basis will be the same as his. Is that correct? (it will affect her estate, but that is not the question...) thanks.
First, it depends on whether or not they live in a community property state, and whether the stock is considered the husband's sole and separate property or the wife has some legal interest in it. In short, the wife gets a stepped up basis in the stock to the extent it belonged to the husband, or all if it's community property. Stu
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