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I'm not an expert, but my reading of the IRS's FAQ [1] is that the cost basis of inherited assets gets reset to the fair market value of the assets on the date

• WalterBright 4y ago
  You're right, and then you pay the inheritance tax which is more than the capital gains taxes would have been.
  • dragonwriter 4y ago
    > > And then you pay the 40% federal inheritance tax and the 20% state inheritance tax on the total value at the date of death. After the $12 million (nearly $13 million next year) exemption, the unused portion of which passes to the surviving spouse and increases their tax-free estate exemption. But, yes, in the limit case estates aren't the tax-optimal way to transfer capital to survivors, which is why other vehicles are used for people for whom the estate exemption is small potatoes.
    • WalterBright 4y ago
      If you're a billionaire, a $12m exemption isn't much of anything.
      • dragonwriter 4y ago
        “But, yes, in the limit case estates aren't the tax-optimal way to transfer capital to survivors, which is why other vehicles are used for people for whom the estate exemption is small potatoes.”
        • WalterBright 4y ago
          Like what?
          • kasey_junk 4y ago
            GRAT’s are common for volatile assets like tech shares.