• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

The Mendel Law Firm, L.P.

Attorneys & Counselors

Call Now: (281) 759-3213

  • FB
  • TW
  • IN
  • RSS
LP Payment button
  • Home
  • Our Firm
    • About Our Firm
    • About The American Academy
    • Advantages of Working With Our Firm
    • Attorney and Staff Profiles
    • Mission Statement
    • Multimedia
    • Published Books
    • The Academy Fellow Designation
  • Services
    • Asset Protection & Business Planning
    • Elder Law & Medicaid Services
      • Are You A Caregiver
      • Coping With Alzheimer’s
      • Guardianship & Conservatorship
      • Hospice Care
      • Emergency Medicaid & Nursing Home Planning
      • Medicaid Planning
      • Veteran’s Benefits
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • Family-Owned Businesses & Farms
    • Financial Planning Assistance
    • Incapacity Planning
    • IRA & Retirement Planning
    • Legacy Planning
    • LGBTQ Estate Planning
    • Pet Planning
    • SECURE Act
    • Special Needs Planning
    • Trust Administration & Probate
  • Seminars
  • Testimonials
    • Client Testimonials
    • Representative Clients
    • Review Us
  • Resources
    • Areas We Serve
      • Baytown
      • Conroe
      • Galveston
      • Houston
      • Pasadena
      • Woodlands
      • West University Place
    • Elder Law Reports
    • Elder Law Resources
      • Galveston Elder Law
      • Houston Elder Law
      • Sugar Land Elder Law
      • West University Place Elder Law
      • Woodlands Elder Law
    • Estate Planning Resources
      • Estate Planning Checkup
      • Estate and Gift Tax Figures
      • Estate Planning Definitions
      • Estate Planning Reports
      • Incapacity Planning Definitions
      • Is Your Estate Plan Outdated?
      • Top Estate Planning Techniques
      • Top 10 Estate and Legacy Planning Techniques
    • Frequently Asked Questions
      • Avoidance Tax Planning FAQs
      • Avoiding Probate FAQs
      • Business Succession Planning FAQs
      • Charitable Gifting FAQs
      • Elder Law FAQs
      • Estate Planning FAQs
      • Frequently Asked Questions for Families Without an Estate Plan
      • IRA and Retirement Planning FAQs
      • Legacy Wealth Planning FAQs
      • LGBTQ Estate Planning Frequently Asked Questions
      • Living Trusts FAQs
      • Medicaid FAQs
      • Nursing Home Planning FAQs
      • Pet Planning FAQs
      • Power of Attorney FAQs
      • Probate FAQs
      • Trust Administration FAQs
      • Trust Administration & Probate FAQs
      • Trusts FAQs
      • Veterans Benefits FAQs
    • LGBTQ Resources
    • Probate Resources
      • Houston Probate
      • Sugarland Probate
      • Woodlands Probate
      • West University Place Probate
    • Probate & Trust Administration Resources
      • Bereavement Resources
      • How to Know if You Need Extra Help With Your Grieving
      • Loss of a Loved One
      • The Mourner’s Bill of Rights
      • Things You Need To Do When a Loved One Passes Away With a Trust
      • Things You Need To Do When a Loved One Passes Away With a Will
      • Trust Administration & Probate Definitions
    • Special Needs Resources
  • Contact Us
  • BLOG
Home » BLOG » Inheriting? This Year, It Could Be Pricey

Inheriting? This Year, It Could Be Pricey

October 6, 2010 by Stephen A. Mendel, Estate Planning Attorney

We all know that the estate tax has been repealed for the year 2010 – and that it’s scheduled to come back, in some form, starting on January 1, 2010. But did you know that, along with the estate tax repeal came a change in the income tax rules that apply to inherited property? The change applies for this year only, and here’s how it works:

When you inherit property, the IRS assigns a value to the property, called the “basis”. If you sell the property in the future, the amount of your gain is measured from this basis, and that’s how your capital gains tax is figured.

Normally, inherited property gets a “stepped-up” basis, meaning that when you inherit property, the basis that’s assigned is the value of the property on the date of the death of the person you inherited it from. This year, though, inherited property gets a “carryover” basis. This means that the basis is not the value of the property as of the deceased person’s death, but his or her original purchase price for the property.

So, imagine you inherited your grandmother’s ring that was bought in 1950 for $700. When she died this year, the ring appraised for $12,000. If you sold the ring today, you might owe capital gains tax on the difference between the $12,000 present value of the ring and the $700 carryover basis. That’s $11,300 in taxable gain! (This is assuming that the executor of her estate didn’t assign you a portion of the additional $1.3 million in stepped up basis available to all estates. But that’s a subject for another day.)

Compare this with what would have happened if your grandmother had passed away in 2009, when the rule was that a stepped-up basis was applied to inherited property. Say the ring was worth $12,000 last year, too. Your basis would be $12,000, so if you sold it for its full value, your gain would be zero, and you wouldn’t owe any capital gains tax.

Amazing what a difference a change in the rules makes.

  • Author
  • Recent Posts
Stephen A. Mendel, Estate Planning Attorney
Stephen A. Mendel, Estate Planning Attorney
Mr. Stephen Mendel is an attorney who focuses a substantial part of his practice on estate planning. Mr. Mendel’s guiding principle is to provide his clients with quality legal services tailored to each client’s specific needs and goals.
Stephen A. Mendel, Estate Planning Attorney
Latest posts by Stephen A. Mendel, Estate Planning Attorney (see all)
  • Famous Estates-Champ or Chump? Nelson Mandela - September 27, 2019
  • Famous Estates-Champ or Chump? Jane Fonda - September 13, 2019
  • Texas Trivia – Name the first of six flags to fly over Texas. - September 6, 2019

Filed Under: General Tagged With: capital gains tax, carryover basis

Other Articles You May Find Useful

  • Famous Estates-Champ or Chump? Nelson Mandela
  • Famous Estates-Champ or Chump? Jane Fonda
  • Texas Trivia – Name the first of six flags to fly over Texas.
  • Famous Estates-Champ or Chump? Paul Walker
  • Texas Trivia – Who played the hero in the movie “Lone Star”?
  • Famous Estates-Champ or Chump? Sam Simon
  • About Stephen A. Mendel, Estate Planning Attorney

    Mr. Stephen Mendel is an attorney who focuses a substantial part of his practice on estate planning. Mr. Mendel’s guiding principle is to provide his clients with quality legal services tailored to each client’s specific needs and goals.

    Primary Sidebar

    The Mendel Law Firm

    Follow Us

    • FB
    • TW
    • IN
    • RSS

    Blog Subscription

    Plan For Your Future and Protect Your Legacy

    • This field is for validation purposes and should be left unchanged.

    HOUSTON

    The Mendel Law Firm, L.P.
    1155 Dairy Ashford, Suite 104
    Houston 77079
    United States (US)
    Phone: (281) 759-3213
    Fax: 281-759-3214

    Map

    map

    Office Hours

    Monday8:00 AM - 5:00 PM
    Tuesday8:00 AM - 5:00 PM
    Wednesday8:00 AM - 5:00 PM
    Thursday8:00 AM - 5:00 PM
    Friday8:00 AM - 5:00 PM

    Footer

    The Mendel Law Firm

    The information on this website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. This information on this website is not intended to create, and receipt or viewing of this information does not constitute, an
    attorney-client relationship.

    © 2021 Mendel Law Firm, All Rights Reserved. Privacy Policy | Contact Us | Disclaimer | Site Map | Powered by American Academy of Estate Planning Attorneys