[WSBARP] Step-Up in Basis Upon Conveyance

[Roger Hawkes]

Thanks, John.  If you find a better transcription program let us know.

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of John J. Sullivan
Sent: Friday, February 17, 2023 1:26 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Step-Up in Basis Upon Conveyance

Mark:

Whether the asset receives a basis adjustment (up or down) or not is a question of federal tax law. The determinative factor is whether it is included in the gross estate of a decedent. If there has been an inter-Vito’s transfer by gift or otherwise that removes the asset from the estate and no Code provision claws it back, there is no basis adjustment.

An advance is still an interviews transfer. Transfer from a trust depends. If an RLT, yes, an irrevocable credit shelter trust that is not QTIP’d, no.

John J. Sullivan

Sent from my iPad


On Feb 16, 2023, at 1:50 PM, Nick Pleasants <npleasants at ohswlaw.com<mailto:npleasants at ohswlaw.com>> wrote:

Mark,
It’s a plain reading of 26 USC § 1014<https://www.law.cornell.edu/uscode/text/26/1014>(b). The basis adjusts to the fair market value if the property is received from a decedent in a way that the statute describes.
As for the examples you posed, I think as a bright line rule, property received before death does not qualify for adjustment to basis, and property received after death can qualify if it meets one of the criteria in the statute. Generally speaking, distributions under a Will, Trust, Transfer on Death Deed, Pay-on-Death, Beneficiary Designation, etc. should all qualify as “inheritance” under 26 USC § 1014(b)(1).
This is not tax advice to you or anyone else.
Best,
Nick
Nicholas Pleasants | Shareholder

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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Mark Anderson
Sent: Thursday, February 16, 2023 9:28 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] Step-Up in Basis Upon Conveyance

Dear All:
My Clients periodically ask questions about the step-up in basis on prospective transfers of real property.  Normally these involve intra-family transfers (between parents and their children, family trusts, etc.).
For the following scenarios, will the recipient receive a step-up in basis?
Transfer prior to death by gift.  [My understanding is that there is no step up in basis.]
Transfer prior to death as a distribution under the terms of a trust agreement.
Transfer prior to death as an advance on inheritance (either by existing will or anticipated intestate succession).
Transfer at time of death pursuant to the terms of a will.  [My understanding is that the recipient receives a step-up in basis.]
Transfer at time of death pursuant to the terms of a trust agreement.
Transfer at time of death pursuant to a transfer on death deed.
In advance, thanks for your help here.
Mark B. Anderson
ANDERSON LAW FIRM PLLC
821 Dock St  Ste 209  PMB 4-12
Tacoma, Washington 98402
+1 253-327-1750
+1 253-327-1751 (fax)
marka at mbaesq.com<mailto:marka at mbaesq.com>
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