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If the spouse is the surviving joint owner, then the asset gets a 1/2 step up in basis.

EXcept, in a Community Property State the entire asset gets a step-up in basis, not just 1/2 of it. Ed

If the asset is community property it will get a full step-up, but not if it is held as joint tenants with right of survivorship. In the minds of most there's not a conceptual distinction, but there is a legal distinction between jointly owned property (which is an Anglo-American common law concept) and community property (which is a Continental European civil law concept), and both types of property ownership can exist in both types of jurisdictions.

I should have made the point earlier. Thanks for bringing up the issue.
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