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Stepped-up basis
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<p>The tax code of the United States holds that when a person (the beneficiary) receives an <a href="/facts/Asset/o7TARXhB">asset</a> from a giver (the benefactor) after the benefactor dies, the asset receives a stepped-up basis, which is its market value at the time the benefactor dies (<a href="/facts/Internal_Revenue_Code/AKPavAh6">Internal Revenue Code</a> § 1014(a)). A stepped-up basis can be higher than the before-death <a href="/facts/Cost_basis/GwfarIaD">cost basis</a>, which is the benefactor's purchase price for the asset, adjusted for improvements or losses. Because taxable capital-gain income is the selling price minus the basis, a high stepped-up basis can greatly reduce the beneficiary's taxable capital-gain income if the beneficiary sells the inherited asset. </p>