James is a resident of the U.S. and has accrued capital gains on an asset. If James' heirs hold the asset at the time of his death, which of the following is true?

Question

Quizplus · Accepted Answer

If James' heirs hold the asset at the time of his death, the asset will receive a "step-up in basis" for tax purposes. This means that the purchase price of the asset for tax purposes will be the fair market value of the asset on the day James died. Therefore, the heirs can sell the asset after James' death without owing capital gains tax on the accrued gains up to the date of James' death.

James Is a Resident of the U