Can you provide a reference for the acquisition date of inherited property?

August 19, 2011

From:  Tamara
Date:  Thu, 2 Apr 2009
Subject:  acquisition date of inherited property

Hello Mr. Gray,

Can you provide a reference for the acquisition date of inherited property being the date of death?

Thank you very much,
Tamara

Answer

Date:  3 Jun 2009

Hello Tamara,

According to Internal Revenue Code Section 1014, the tax basis of inherited property is generally the fair market value on the date of death, or the alternate valuation date if that value was used on the decedent’s estate tax return.

According to Internal Revenue Code Section 1223(9), the holding period for inherited property sold within one year after the decedent’s death shall be considered to be more than one year. (A gain from the sale of capital gain property sold after a decedent’s death qualifies for taxation as a long-term capital gain.)

In Revenue Ruling 63-223, the IRS stated that depreciation determined for the period after a decedent’s death shall be computed using the fair market value as of the date of death or the fair market value on the alternate valuation date, as applicable.

These citations support the statement that the acquisition date of inherited property is generally the date of death, and that gains for inherited capital gain property sold within one year after the date of death are taxed as long-term capital gains.

Good luck!


Mike Gray

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