The short answer
Inherited stock and property generally get a step-up in basis: your cost becomes the value on the date of death, not what the person originally paid. If you sell soon after, there's often little or no taxable gain. Inherited IRAs and 401(k)s don't get this.
Last reviewed: October 2026
This page explains how taxes and reporting work. It isn't a recommendation to buy, sell or hold any investment.
Why it matters
Say your parent bought stock for $10,000, and it was worth $100,000 when they died. Your basis is $100,000. Sell it for $102,000 and your gain is $2,000, not $92,000. It's always treated as long-term, however long you held it.
The 1099-B problem
Brokers often show inherited shares as "noncovered" or with no basis. If that's not corrected, it can look like the whole sale is profit. Get the date-of-death values from the estate's executor, attorney or the brokerage.
Special cases
- Jointly owned by spouses: in Florida, generally only the deceased spouse's half gets a new basis.
- Gifts made while living: no step-up. You take over the giver's original basis.
- A house: same rule. Get an appraisal as of the date of death if you can. Selling costs reduce your gain.
Inherited IRAs and 401(k)s are different
There's no step-up. Withdrawals are taxed as ordinary income (except qualified Roth withdrawals). Most non-spouse beneficiaries must empty the account within 10 years, and some must also take yearly withdrawals. Timing those withdrawals can make a big difference.
Official source: IRS Publication 551, Basis of Assets.
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Disclaimer: This page is general information, not tax advice. Every situation is different, and tax rules change. Reading this page doesn't make you a client.