(Updated) In most cases, there is at least some kind of step-up in basis when property is inherited. But there are a few exceptions and some subtle distinctions that do occur.
To help make the conversation easier, we have created the “Will I Receive A Step-Up In Basis For This Inherited Property?” flowchart. It addresses some of the most common issues that arise for a client trying to understand how their cost basis is impacted as a result of property they inherited. This flowchart considers: