Internal Revenue Code:Sec. 1014. Basis of property acquired from a decedent
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Contents |
Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter O - Gain or Loss on Disposition of Property
PART II - BASIS RULES OF GENERAL APPLICATION
Statute
Sec. 1014. Basis of property acquired from a decedent
(a) In general
Except as otherwise provided in this section, the basis of
property in the hands of a person acquiring the property from a
decedent or to whom the property passed from a decedent shall, if
not sold, exchanged, or otherwise disposed of before the decedent's
death by such person, be -
(1) the fair market value of the property at the date of the
decedent's death,
(2) in the case of an election under either section 2032 or
section 811(j) of the Internal Revenue Code of 1939 where the
decedent died after October 21, 1942, its value at the applicable
valuation date prescribed by those sections,
(3) in the case of an election under section 2032A, its value
determined under such section, or
(4) to the extent of the applicability of the exclusion
described in section 2031(c), the basis in the hands of the
decedent.
(b) Property acquired from the decedent
For purposes of subsection (a), the following property shall be
considered to have been acquired from or to have passed from the
decedent:
(1) Property acquired by bequest, devise, or inheritance, or by
the decedent's estate from the decedent;
(2) Property transferred by the decedent during his lifetime in
trust to pay the income for life to or on the order or direction
of the decedent, with the right reserved to the decedent at all
times before his death to revoke the trust;
(3) In the case of decedents dying after December 31, 1951,
property transferred by the decedent during his lifetime in trust
to pay the income for life to or on the order or direction of the
decedent with the right reserved to the decedent at all times
before his death to make any change in the enjoyment thereof
through the exercise of a power to alter, amend, or terminate the
trust;
(4) Property passing without full and adequate consideration
under a general power of appointment exercised by the decedent by
will;
(5) In the case of decedents dying after August 26, 1937,
and before January 1, 2005,
property acquired by bequest, devise, or inheritance or by the
decedent's estate from the decedent, if the property consists of
stock or securities of a foreign corporation, which with respect
to its taxable year next preceding the date of the decedent's
death was, under the law applicable to such year, a foreign
personal holding company. In such case, the basis shall be the
fair market value of such property at the date of the decedent's
death or the basis in the hands of the decedent, whichever is
lower;
(6) In the case of decedents dying after December 31, 1947,
property which represents the surviving spouse's one-half share
of community property held by the decedent and the surviving
spouse under the community property laws of any State, or
possession of the United States or any foreign country, if at
least one-half of the whole of the community interest in such
property was includible in determining the value of the
decedent's gross estate under chapter 11 of subtitle B (section
2001 and following, relating to estate tax) or section 811 of the
Internal Revenue Code of 1939;
(7) In the case of decedents dying after October 21, 1942, and
on or before December 31, 1947, such part of any property,
representing the surviving spouse's one-half share of property
held by a decedent and the surviving spouse under the community
property laws of any State, or possession of the United States or
any foreign country, as was included in determining the value of
the gross estate of the decedent, if a tax under chapter 3 of the
Internal Revenue Code of 1939 was payable on the transfer of the
net estate of the decedent. In such case, nothing in this
paragraph shall reduce the basis below that which would exist if
the Revenue Act of 1948 had not been enacted;
(8) In the case of decedents dying after December 31, 1950, and
before January 1, 1954, property which represents the survivor's
interest in a joint and survivor's annuity if the value of any
part of such interest was required to be included in determining
the value of decedent's gross estate under section 811 of the
Internal Revenue Code of 1939;
(9) In the case of decedents dying after December 31, 1953,
property acquired from the decedent by reason of death, form of
ownership, or other conditions (including property acquired
through the exercise or non-exercise of a power of appointment),
if by reason thereof the property is required to be included in
determining the value of the decedent's gross estate under
chapter 11 of subtitle B or under the Internal Revenue Code of
1939. In such case, if the property is acquired before the death
of the decedent, the basis shall be the amount determined under
subsection (a) reduced by the amount allowed to the taxpayer as
deductions in computing taxable income under this subtitle or
prior income tax laws for exhaustion, wear and tear,
obsolescence, amortization, and depletion on such property before
the death of the decedent. Such basis shall be applicable to the
property commencing on the death of the decedent. This paragraph
shall not apply to -
(A) annuities described in section 72;
(B) property to which paragraph (5) would apply if the
property had been acquired by bequest; and
(C) property described in any other paragraph of this
subsection.
(10) Property includible in the gross estate of the decedent
under section 2044 (relating to certain property for which
marital deduction was previously allowed). In any such case, the
last 3 sentences of paragraph (9) shall apply as if such property
were described in the first sentence of paragraph (9).
(c) Property representing income in respect of a decedent
This section shall not apply to property which constitutes a
right to receive an item of income in respect of a decedent under
section 691.
(d) Special rule with respect to DISC stock
If stock owned by a decedent in a DISC or former DISC (as defined
in section 992(a)) acquires a new basis under subsection (a), such
basis (determined before the application of this subsection) shall
be reduced by the amount (if any) which would have been included in
gross income under section 995(c) as a dividend if the decedent had
lived and sold the stock at its fair market value on the estate tax
valuation date. In computing the gain the decedent would have had
if he had lived and sold the stock, his basis shall be determined
without regard to the last sentence of section 996(e)(2) (relating
to reductions of basis of DISC stock). For purposes of this
subsection, the estate tax valuation date is the date of the
decedent's death or, in the case of an election under section 2032,
the applicable valuation date prescribed by that section.
(e) Appreciated property acquired by decedent by gift within 1 year
of death
(1) In general
In the case of a decedent dying after December 31, 1981, if -
(A) appreciated property was acquired by the decedent by gift
during the 1-year period ending on the date of the decedent's
death, and
(B) such property is acquired from the decedent by (or passes
from the decedent to) the donor of such property (or the spouse
of such donor),
the basis of such property in the hands of such donor (or spouse)
shall be the adjusted basis of such property in the hands of the
decedent immediately before the death of the decedent.
(2) Definitions
For purposes of paragraph (1) -
(A) Appreciated property
The term ''appreciated property'' means any property if the
fair market value of such property on the day it was
transferred to the decedent by gift exceeds its adjusted basis.
(B) Treatment of certain property sold by estate
In the case of any appreciated property described in
subparagraph (A) of paragraph (1) sold by the estate of the
decedent or by a trust of which the decedent was the grantor,
rules similar to the rules of paragraph (1) shall apply to the
extent the donor of such property (or the spouse of such donor)
is entitled to the proceeds from such sale.
(f) Termination
This section shall not apply with respect to decedents dying
after December 31, 2009.
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 296; Pub. L. 85-320, Sec. 2,
Feb. 11, 1958, 72 Stat. 5; Pub. L. 92-178, title V, Sec. 502(f),
Dec. 10, 1971, 85 Stat. 550; Pub. L. 94-455, title XIX, Sec.
1901(c)(8), title XX, Sec. 2005(a)(1), Oct. 4, 1976, 90 Stat. 1803,
1872; Pub. L. 95-600, title V, Sec. 515(1), title VII, Sec.
702(c)(1)(A), Nov. 6, 1978, 92 Stat. 2884, 2926; Pub. L. 96-222,
title I, Sec. 107(a)(2)(A), Apr. 1, 1980, 94 Stat. 222; Pub. L.
96-223, title IV, Sec. 401(a), Apr. 2, 1980, 94 Stat. 299; Pub. L.
97-34, title IV, Sec. 425(a), Aug. 13, 1981, 95 Stat. 318; Pub. L.
97-448, title I, Sec. 104(a)(1)(A), Jan. 12, 1983, 96 Stat. 2379;
Pub. L. 105-34, title V, Sec. 508(b), Aug. 5, 1997, 111 Stat. 860;
Pub. L. 107-16, title V, Sec. 541, June 7, 2001, 115 Stat. 76.)
Amendment of Section
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Termination Date of 2001 Amendment note below.
References in Text
REFERENCES IN TEXT
Section 811 of the Internal Revenue Code of 1939, referred to in
subsecs. (a)(2) and (b)(6), (8), was classified to section 811 of
former Title 26, Internal Revenue Code. For table of comparisons of
the 1939 Code to the 1986 Code, see Table I preceding section 1 of
this title. See, also, section 7851(e) of this title for provision
that references in the 1986 Code to a provision of the 1939 Code,
not then applicable, shall be deemed a reference to the
corresponding provision of the 1986 Code, which is then applicable.
Chapter 3 of the Internal Revenue Code of 1939, referred to in
subsec. (b)(7), was comprised of sections 800 to 951 of former
Title 26, Internal Revenue Code. For table of comparisons of the
1939 Code to the 1986 Code, see Table I preceding section 1 of this
title. See also section 7851(a)(2)(A) of this title for
applicability of chapter 3 of former title 26. See also section
7851(e) of this title for provision that references in the 1986
Code to a provision of the 1939 Code, not then applicable, shall be
deemed a reference to the corresponding provision of the 1986 Code,
which is then applicable.
Revenue Act of 1948, referred to in subsec. (b)(7), is act Apr.
2, 1948, ch. 168, 62 Stat. 110. For complete classification of this
Act to the Code, see Tables.
The Internal Revenue Code of 1939, referred to in subsec. (b)(9),
is act Feb. 10, 1939, ch. 2, 53 Stat. 1, as amended. Prior to the
enactment of the Internal Revenue Code of 1986 (formerly I.R.C.
1954), the 1939 Code was classified to former Title 26, Internal
Revenue Code. For table of comparisons of the 1939 Code to the 1986
Code, see Table I preceding section 1 of this title.
Miscellaneous
AMENDMENTS
2004 - Pub.L. 108-357 Sec. 413(c)(18). Paragraph (5) of section 1014(b)
is amended by inserting ``and before January 1, 2005,'' after
``August 26, 1937,''.
2001 - Subsec. (f). Pub. L. 107-16, Sec. 541, 901, temporarily
added subsec. (f). See Termination Date of 2001 Amendment note
below.
1997 - Subsec. (a). Pub. L. 105-34 struck out ''or'' at end of
pars. (1) and (2), struck out the period at end of par. (3) and
inserted '', or'', and added par. (4).
1983 - Subsec. (b)(10). Pub. L. 97-448 added par. (10).
1981 - Subsec. (e). Pub. L. 97-34 added subsec. (e).
1980 - Subsec. (a)(3). Pub. L. 96-222 substituted ''section
2032A'' for ''section 2032.1''.
Subsec. (d). Pub. L. 96-223 repealed the amendment made by Pub.
L. 94-455, Sec. 2005(a)(1). See 1976 Amendment note below.
1978 - Subsec. (a). Pub. L. 95-600, Sec. 702(c)(1)(A), designated
existing provisions as pars. (1) and (2) and added par. (3).
Subsec. (d). Pub. L. 95-600, Sec. 515(1), substituted ''December
31, 1979'' for ''December 31, 1976'' in heading and text.
1976 - Subsec. (b)(6), (7). Pub. L. 94-455, Sec. 1901(c)(8),
struck out ''Territory,'' after ''under the community property laws
of any State,''.
Subsec. (d). Pub. L. 94-455, Sec. 2005(a)(1), substituted
provision relating to the applicability of this section to
decedents dying after 1976 for provision relating to a special rule
with respect to DISC stock. See Repeals note below.
1971 - Subsec. (d). Pub. L. 92-178 added subsec. (d).
1958 - Subsec. (d). Pub. L. 85-320 repealed subsec. (d) which
made section inapplicable to restricted stock options described in
section 421 which the employee has not exercised at death.
TERMINATION DATE OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 inapplicable to estates of decedents
dying, gifts made, or generation skipping transfers, after Dec. 31,
2010, and the Internal Revenue Code of 1986 to be applied and
administered to such estates, gifts, and transfers as if such
amendment had never been enacted, see section 901 of Pub. L.
107-16, set out as an Effective and Termination Dates of 2001
Amendment note under section 1 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 508(e)(1) of Pub. L. 105-34 provided that: ''The
amendments made by subsections (a) and (b) (amending this section
and section 2031 of this title) shall apply to estates of decedents
dying after December 31, 1997.''
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-448 effective, except as otherwise
provided, as if it had been included in the provision of the
Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Section 425(b) of Pub. L. 97-34 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to
property acquired after the date of the enactment of this Act (Aug.
13, 1981) by decedents dying after December 31, 1981.''
EFFECTIVE DATE OF 1980 AMENDMENTS AND REVIVAL OF PRIOR LAW
Amendment by Pub. L. 96-223 (repealing section 2005(a)(1) of Pub.
L. 94-455 and the amendment made thereby, which had amended this
section) applicable in respect of decedents dying after Dec. 31,
1976, and except for certain elections, this title to be applied
and administered as if those repealed provisions had not been
enacted, see section 401(b), (e) of Pub. L. 96-223, set out as a
note under section 1023 of this title.
Amendment by Pub. L. 96-222 effective, except as otherwise
provided, as if it had been included in the provisions of the
Revenue Act of 1978, Pub. L. 95-600, to which such amendment
relates, see section 201 of Pub. L. 96-222, set out as an Effective
Date of 1980 Amendment note under section 32 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Section 702(c)(10) of Pub. L. 95-600 provided that: ''The
amendments made by this subsection (amending this section and
sections 1001, 1223, and 2614 of this title) shall take effect as
if included in the amendments and additions made by, and the
appropriate provisions of the Tax Reform Act of 1976 (Pub. L.
94-455, Oct. 4, 1976, 90 Stat 1525).''
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 1901(c)(8) of Pub. L. 94-455 applicable with
respect to taxable years beginning after Dec. 31, 1976, see section
1901(d) of Pub. L. 94-455, set out as a note under section 2 of
this title.
Amendment by section 2005(a)(1) of Pub. L. 94-455 applicable in
respect of decedents dying after Dec. 31, 1976, see section 2005(f)
of Pub. L. 94-455, set out as an Effective Date note under section
1015 of this title.
EFFECTIVE DATE OF 1971 AMENDMENT
Amendment by Pub. L. 92-178 applicable with respect to taxable
years ending after Dec. 31, 1971, except that a corporation may not
be a DISC for any taxable year beginning before Jan. 1972, see
section 507 of Pub. L. 92-178, set out as a note under section 991
of this title.
EFFECTIVE DATE OF 1958 AMENDMENT
Amendment by Pub. L. 85-320 applicable with respect to taxable
years ending after Dec. 31, 1956, but only in the case of employees
dying after such date, see section 3 of Pub. L. 85-320, set out as
a note under section 421 of this title.
REPEALS
Pub. L. 94-455, Sec. 2005(a)(1), cited as a credit to this
section, and the amendment made thereby, were repealed by Pub. L.
96-223, title IV, Sec. 401(a), 94 Stat. 299, resulting in the text
of this section reading as it read prior to enactment of section
2005(a)(1). See Effective Date of 1980 Amendments and Revival of
Prior Law note above.
ELECTION OF CARRYOVER BASIS RULES BY CERTAIN ESTATES
Pub. L. 96-223, title IV, Sec. 401(d), Apr. 2, 1980, 94 Stat.
300, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat.
2095, provided that: ''Notwithstanding any other provision of law,
in the case of a decedent dying after December 31, 1976, and before
November 7, 1978, the executor (within the meaning of section 2203
of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)) of
such decedent's estate may irrevocably elect, within 120 days
following the date of enactment of this Act (Apr. 2, 1980) and in
such manner as the Secretary of the Treasury or his delegate shall
prescribe, to have the basis of all property acquired from or
passing from the decedent (within the meaning of section 1014(b) of
the Internal Revenue Code of 1986) determined for all purposes
under such Code as though the provisions of section 2005 of the Tax
Reform Act of 1976 (Pub. L. 94-455) (as amended by the provisions
of section 702(c) of the Revenue Act of 1978 (Pub. L. 95-600)
applied to such property acquired or passing from such decedent.''
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 42, 179, 197, 338, 355,
382, 551, 1001, 1223, 1246, 1291, 1296, 1367, 1400C, 2032A, 2654 of
this title.
