Are there states where the step up in cost basis for an inheritance is not allowed?

The step-up in basis is governed by Internal Revenue Code Section 1014, which defines the procedures and theory. Federal law prevails over state law in filing US income tax returns.

Individual states may pass laws restricting stepped-up basis or redefine the process as it pertains to the state treatment of basis. However this is a consideration in file a state income tax return; the a federal US tax return.

Lawrence L Erickson, E.A.

Oregon Licensed Tax Consultant