Previously, I described key ideas used in reducing or eliminating gain subject to
tax when you sell an interest in your business.
For example, suppose you buy stock for $10 and sell it for $50. The
sale generates a $40 gain, the excess of the $50 sale price over
your $10 purchase price. Your $10 purchase price is referred to as
your tax "basis." However, if you die holding this stock,
its basis will increase to the $50 date-of-death value. This
increase and other basis increases are referred to as "basis
step-up." (Of course, if the value at death is less than
pre-mortem basis, the basis decreases, which you don't
want.)
When a married person dies and passes assets outright or in a
qualifying trust for the surviving spouse, those assets receive a
new basis (hopefully a step-up instead of a reduced basis) but, due
to an unlimited marital deduction, are not subject to estate tax.
At the surviving spouse's death, for estate tax purposes the
assets are treated in most
