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Old 04-13-2011, 06:16 AM
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Join Date: Apr 2011
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Stepped-up basis vs. Sale Price

I need help figuring out whether I have to use the stepped-up basis of an asset as my basis, or whether I can use the actual sale price if the asset is sold, and how long I have to sell the asset if that is an option. Here are the facts: I inherited a piece of farm ground with development potential. The appraised value at date of death (January, 2011) is $400,000, but I'm fairly certain that, because of the development potential, I can sell it for considerably more than the $400,000. There are no more assets in the estate, so there is no danger of estate tax being due, even if the land were valued much higher. My initial assumption is that my basis is $400,000 and that if I sold it for $600,000, I would have to pay capital gains tax on the $200,000 gain. My question is, if I can sell it for $600,000 within a certain amount of time from the death, can I make the argument that my true stepped-up basis should have been $600,000? How long would I have to do this? I considered the six-month alternative valuation date, but it sounds like this only applies in estates where there is estate tax due and only if the alternative valuation is lower. In other words, it's only useful for lowering estate tax, not for raising stepped-up basis. Any help would be appreciated.

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