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>>>Wasn't this “step-up in basis” eliminated in the Estate Tax changes?<<<

Not until 2010. The loss of the stepup in basis will cause more tax liability for middle class heirs who would have been spared the estate tax burden by the Allowable Exclusion Amount. 1.5M in 2004

Currently, you could inherit 1.5M in property and have no estate tax liability. With the step up in basis to value at day of death(or alternate date) there would be little capital gains tax.

Mr. Bush's tax plan did away the estate tax so there's no tax there but you lose the step up so your liabiliy is based on the decedent basis.

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