Inheritance of Securities

What this video covers

• How the cost basis of an inherited security resets to fair market value (FMV) on the date of death, wiping out decades of unrealized gains
• Why a stepped-down basis works the same way for losers, eliminating unrealized losses at death
• Why inherited securities are automatically treated as long-term capital assets, even if sold the day after inheriting
• How the executor can elect the alternate valuation date (6 months after death), and the strict rule that it must reduce BOTH gross estate value AND estate tax liability
• Why the alternate valuation date is all-or-nothing across the estate, with no cherry-picking individual assets
• How community property states step up both halves of marital property, while common law states only step up the decedent's half
• The carryover basis on lifetime gifts vs. the fresh FMV basis on inheritance, and why highly appreciated assets are often better held until death