Stepped up basis
Inherited assets get a new cost basis at the date of death, erasing the gain for tax.
Where it is explained in full
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Words beside it
- basis
Basis is the amount of money you already paid tax on inside an account, so the IRS will not tax it again when you take it out. Keeping track of your basis is important during a backdoor Roth conversion so you do not accidentally pay tax twice.
- Basis (cost basis)
What you paid for an investment, including commissions, used to compute gains for tax.
- Cost basis
What you paid, including commissions, used to figure the gain when you sell.
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