Summary of What Is Tax Basis?

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The tax basis of an asset is its value at the time it is acquired. This is important in estate planning because when an asset is left to an heir, their basis increases to the value at the time of the death of the owner. If an heir sells an asset for more than the original tax basis, any taxes paid on the difference between the original tax basis and the sale price are their responsibility.

• 00:00:00 The tax basis of an asset is the value of the asset at the time you acquired it. This is important in estate planning because when you pass away and leave an asset to an heir, their basis increases to the value at the time of your death. If an heir sells an asset for more than the original tax basis, any taxes paid on the difference between the original tax basis and the sale price are their responsibility.
• 00:05:00 Tax basis is the value assigned to an asset when you receive it, and through estate planning, we worry about it and talk about it because we can achieve a full step up in basis of the value and not have to worry about the original basis after you've passed away if we leave it to your heirs in the right way.