Question

Robin inherits 1,000 shares of wal-mart stock from her aunt in 2017. according to the information received from the executor of her aunt's estate, robin's adjusted basis for the stock is $55,000. albert, robin's fiancé, receives 1,000 shares of wal-mart stock from his uncle as a gift in 2017. his uncle tells albert that his adjusted basis for the wal-mart stock is $7,000. what could cause the substantial difference in the adjusted basis for robin's and albert's respective 1,000 shares of wal-mart stock?

Answer 1

Answer: For inherited property, the basis is a new basis (i.e., fair market value on the date of the decedent's death unless the executor of the estate elects the alternate valuation date and amount), also known as "stepped-up basis." The $55,000 adjusted basis for Robin's Wal-Mart shares appears to be the fair market value of the stock at the date of her aunt's death.