Step Down in Basis at Date of Death

Alan · 2009-01-12T23:56:54+00:00

With the "crash" of stock market prices in 2008, it is quite possible that people who start to die will see a fair market value on the date of death that may be less than the cost basis.Am I correct that in this instance, there would be a step down in cost basis and that the heirs would now own stock that has a cost basis that is less than what the decedent paid?I am aware of using an alternate date.

Jan 12, 2009 21 Replies

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Bill Brown 17 years ago

Except for a $3,000 deduction against ordinary income, it doesn't make a difference unless the decedent-to-be has capital gains that can be offset by the realized capital loss.

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JoeTaxpayer 17 years ago

Agreed. I was expecting to see the suggestion of the conversion to Roth of some IRA assets of the soon to meet his maker.

Joe

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