What Does Stepped-Down Basis Mean In Estate Planning?

What Does Stepped-Down Basis Mean In Estate Planning?

Same as the stepped-up basis except the asset has gone down in value since it was purchased.  The new owner would take that asset with a new lower (stepped-down) basis.  This depends on the value as of the date of death of the owner compared to the price the owner originally purchased the asset.

Example Of Stepped-Down Basis In Regards To Estate Planning

Dad was convinced that AOL was going to make a comeback.  He bought it for $50,000 and it’s now worth $5,000.  Instead of selling his AOL stock at a loss during his lifetime he held onto it.  I now own it with a basis of $5,000.

Kelley Scrocca, LLM
Connect with me
Business, Expert Estate Planning, and Probate Attorney Dedicated To Helping You Preserve Your Legacy