A provision in tax law that can reset what an inherited asset is treated as having cost — stepping it up to the value at the date of death rather than what the person who died originally paid. For families holding land that's appreciated over generations, this is one of the most consequential rules there is.
Why Basis Matters So Much
When something is sold, the tax question is about the gain — the difference between the sale and the basis. A low basis means a large gain; a higher basis means a smaller one.
So a rule that can reset basis is a rule about how much tax exists at all, which is why it gets so much attention.
The Generational Land Case
Ground bought decades ago may have a basis bearing no relation to what it's worth now. Sold without the provision applying, the gain would be enormous. That single difference has decided whether families could keep places together.
It's also why selling before versus after certain events can produce completely different outcomes — and why these decisions shouldn't be made on instinct.
Do Not Act on This Page
The rules about when it applies, what it applies to, how jointly held and community property are treated, and what documentation you need are genuinely technical. There have also been repeated proposals to change them.
Nothing here tells you what applies to your family. Before you sell, gift or restructure anything substantial, talk to your CPA and your attorney. Getting the order of operations right is worth real money.
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