Stepped-up definitions
| Word backwards | pu-deppets |
|---|---|
| Part of speech | Stepped-up is a verb. |
| Syllabic division | stepped-up sy-lab-i-fi-ca-tion |
| Plural | The plural of the word stepped-up is stepped-ups. |
| Total letters | 9 |
| Vogais (2) | e,u |
| Consonants (4) | s,t,p,d |
Stepped-up basis refers to the adjustment of the value of an appreciated asset for tax purposes upon the death of the owner. This adjustment can result in a higher value for the asset, which can be beneficial for heirs since it reduces the capital gains tax liability when the asset is eventually sold.
How Does Stepped-Up Basis Work?
When an individual passes away and leaves assets to their beneficiaries, the value of those assets is "stepped up" to their current market value as of the date of the individual's death. This means that the new basis for the assets is the fair market value at the time of the owner's death, rather than the original purchase price.
Benefits of Stepped-Up Basis
One of the main benefits of a stepped-up basis is that it can significantly reduce the capital gains tax liability for heirs. When the heirs eventually sell the inherited assets, they only have to pay capital gains tax on the appreciation of the assets since the date of the owner's death, rather than since the original purchase of the assets.
Example of Stepped-Up Basis
For example, if an individual purchased stocks for $10,000 several years ago and at the time of their death, the stocks were valued at $50,000, the heirs would receive a stepped-up basis of $50,000. If the heirs sell the stocks for $55,000, they would only have to pay capital gains tax on the $5,000 appreciation since the date of the owner's death, rather than on the $45,000 total appreciation since the original purchase.
Conclusion
In conclusion, a stepped-up basis can provide significant tax benefits to heirs of appreciated assets. By resetting the basis of the assets to their fair market value at the time of the owner's death, heirs can reduce their capital gains tax liability when they eventually sell the assets. It is essential to understand the implications of stepped-up basis and work with a financial advisor or tax professional to make informed decisions regarding estate planning and asset transfers.
Stepped-up Examples
- The firefighter stepped-up to rescue the trapped kitten from the burning building.
- The CEO announced a stepped-up initiative to increase workplace diversity.
- The police department has a stepped-up presence in high-crime areas.
- The chef's stepped-up cooking skills earned them a spot on a popular cooking show.
- The athlete's stepped-up training regimen led to improved performance on the field.
- The teacher implemented a stepped-up homework policy to improve student success.
- The city council approved a stepped-up plan to revitalize the downtown area.
- The charity organization saw a stepped-up level of donations during the holiday season.
- The military deployed a stepped-up strategy to combat the advancing enemy forces.
- The environmental group called for a stepped-up effort to protect endangered species.