Recognizing the importance of stepped-up basis under section 1014 of the Internal Revenue Code of 1986 in preserving family-owned farms and small businesses.

As background, the basis for federal tax purposes of certain inherited assets is reset (or stepped up) from the original cost basis to the fair market value of the asset on the date of the previous owner’s death. Thus, any gain or loss on the subsequent sale of an inherited asset generally is calculated based on the asset’s stepped-up basis (and not the original cost basis).