Cost Basis: Inherited or Gifted Securities

What this video covers

• Why inherited securities receive a basis stepped up (or down) to fair market value at the date of death, and how this erases unrealized gains
• When the alternate valuation date (6 months after death) can be elected, and the estate tax return filing required to use it
• Why all inherited securities are always long-term, regardless of how quickly the beneficiary sells
• How the dual basis rule creates two separate price tags for a gift of depreciated property: donor's basis for gains, gift-date fair market value for losses
• What happens when a sale price lands in the no man's land zone between donor's basis and gift-date fair market value: zero taxable gain or loss
• When the dual basis rule does not apply (FMV at gift equal to or greater than donor's basis), and why carryover basis is then used in every scenario
• How to distinguish inherited versus gifted securities in side-by-side exam questions using the death equals delete the gain, gift equals grandfather of the basis framework