IRS Says Certain Trust Assets Ineligible for Stepped-Up Basis (1)

The IRS on Wednesday released guidance clarifying that stepped-up basis generally doesn’t apply for assets in grantor trusts that are outside the owner’s estate for estate-tax purposes.

Release of the guidance, Revenue Ruling 2023-02, comes after a project on the topic had been added to the IRS’s priority guidance plan in November 2022Rep. Bill Pascrell (D-N.J.), a senior member of the House Ways and Means Committee, had requested guidance in this area, as had several Democratic senators

• Pascrell praised the guidance, calling it “a win in the fight for fairer tax administration.”
• Estate-tax lawyers had anticipated that ...