Cost Basis: Inherited or Gifted Securities

What this video covers

• Why inherited securities get a stepped-up (or stepped-down) cost basis equal to fair market value (FMV) on the date of death, and how that wipes out the decedent's unrealized gains
• When the executor can elect the alternate valuation date six months after death, and why it requires filing Form 706 and must reduce the estate's value
• Why inherited securities are always treated as long-term, even if the beneficiary sells the next morning
• How the carryover basis works for gifted securities when FMV at the gift date is equal to or higher than the donor's basis, including the tacked-on holding period
• The dual basis rule for gifts of depreciated property: donor's basis for gains, FMV at gift date for losses, with a fresh holding period on the loss side
• Why a sale price between the donor's basis and the lower FMV at the gift date lands in "no man's land" and produces zero gain or loss
• The memory aid "Death deletes the gain, Gift grandfathers the basis," and the side-by-side distinctions that separate the two transfer types