Date: 06/08/99

Primary Author: Scott Beane, CPA

Question:

Is it true that if I gift low basis assets, like stock I bought in 1960, to a terminally ill person and he or she then Wills the items back to me, that such inherited property that I receive will be granted a tax cost basis equal to the fair market value on the date of death and that upon sale of that property at that price I will not have any capital gain taxes to pay?

Answer:

In general, you are correct. However, Section 1014, relating to basis step-up, may not apply to those assets if, within one year of death, such appreciated assets revert back to you. Also keep in mind that the gift, if greater than $10,000 will require a gift tax return.

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