What does step-up in basis mean on the CPA exam?
Step-up in basis. Resetting inherited property's basis to its fair market value at the date of death, which erases the unrealized gain of the decedent's lifetime.
Defined against Sec. 1014.
Which CPA exam sections use step-up in basis?
Step-up in basis appears in the TCP section of the CPA exam.
Related terms
- fair market value: The price at which property would change hands between a willing buyer and a willing seller, neither under compulsion and both reasonably informed.
- carryover basis: Basis that follows the property from the previous owner instead of resetting to what was paid.
- unified credit: The credit that shelters the basic exclusion amount from gift and estate tax.
- adjusted basis: What the taxpayer has invested in property for tax purposes: cost, plus improvements, less depreciation taken.
- hot assets: A partnership's unrealized receivables and inventory.
- asset acquisition: Buying a group of assets that does not amount to a business.