Basis is the tax cost of an asset, and heirs receive a stepped-up basis to fair market value at death, which can reduce capital gains.

Basis is the tax cost of an asset, and heirs receive a stepped-up basis to fair market value at death, which can reduce capital gains.

• A. True
• B. False
• C. Only applies to real estate
• D. Always eliminates all taxes

Answer: (A)