The readjustment of the value of an appreciated asset for tax purposes upon inheritance. With a step-up in basis, the value of the asset is determined to be the higher market value of the asset at the time of inheritance, not the value at which the original party purchased the asset.

In other words, if the heir sells the property upon receipt, there would be no tax gain as the property has been "stepped up" to market value.

Please speak with your accountant for more information.