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Heirs already benefit from basis step-up

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. I haven’t seen any mention of an extension of favorable “basis” rules for estates. Was this in the new law? T.S., Park City, Utah

A. No, because it wasn’t necessary. For 2010, heirs could choose between a step-up in basis for inherited assets or modified carryover basis rules. Under the latter, income tax resulting from a sale of the assets could be offset by an exemption of $3 million for a surviving spouse and $1.3 million for other beneficiaries. But a 2010 law restored the step-up in basis for assets inherited after 2010.

Tip: The new American Taxpayer Relief Act extends various other estate tax benefits, including a $5 million exemption (indexed to $5.25 million for 2013).

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