[Code of Federal Regulations]
[Title 26, Volume 11]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1014-1]

[Page 41-42]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1014-1  Basis of property acquired from a decedent.

    (a) General rule. The purpose of section 1014 is, in general, to 
provide a basis for property acquired from a decedent which is equal to 
the value placed upon such property for purposes of the Federal estate 
tax. Accordingly, the general rule is that the basis of property 
acquired from a decedent is the fair market value of such property at 
the date of the decedent's death, or, if the decedent's executor so 
elects, at the alternate valuation date prescribed in section 2032, or 
in section 811(j) of the Internal Revenue Code of 1939. Property 
acquired from a decedent includes, principally, property acquired by 
bequest, devise, or inheritance, and, in the case of decedents dying 
after December 31, 1953, property required to be included in determining 
the value of the decedent's gross estate under any provision of the 
Internal Revenue Code of 1954 or the Internal Revenue Code of 1939. The 
general rule governing basis of property acquired from a decedent, as 
well as other rules prescribed elsewhere in this section, shall have no 
application if the property is sold, exchanged, or otherwise disposed of 
before the decedent's death by the person who acquired the property from 
the decedent. For general rules on the applicable valuation date where 
the executor of a decedent's estate elects under section 2032, or under 
section 811(j) of the Internal Revenue Code of 1939, to value the 
decedent's gross estate at the alternate valuation date prescribed in 
such sections, see paragraph (e) of Sec. 1.1014-3.
    (b) Scope and application. With certain limitations, the general 
rule described in paragraph (a) of this section is applicable to the 
classes of property described in paragraphs (a) and (b) of Sec. 1.1014-
2, including stock in a DISC or former DISC. In the case of stock in a 
DISC or former DISC, the provisions of this section and Sec. Sec. 
1.1014-2 through 1.1014-8 are applicable, except as provided in Sec. 
1.1014-9. Special basis rules with respect to the basis of certain other 
property acquired from a decedent are set forth in paragraph (c) of 
Sec. 1.1014-2. These special rules concern certain stock or securities 
of a foreign personal holding company and the surviving spouse's one-
half share of community property held with a decedent dying after 
October 21, 1942, and on or before December 31, 1947. In this section 
and Sec. Sec. 1.1014-2 to 1.1014-6, inclusive, whenever the words 
property acquired from a decedent are used, they shall also mean 
property passed from a decedent, and the phrase person who acquired it 
from the decedent shall include the person to whom it passed from the 
decedent.
    (c) Property to which section 1014 does not apply. Section 1014 
shall have no application to the following classes of property:
    (1) Property which constitutes a right to receive an item of income 
in respect of a decedent under section 691; and
    (2) Restricted stock options described in section 421 which the 
employee has not exercised at death if the employee died before January 
1, 1957. In the case of employees dying after December 31, 1956, see 
paragraph (d)(4) of Sec. 1.421-5. In the case of employees dying in a 
taxable year ending after December 31, 1963, see paragraph (c)(4) of 
Sec. 1.421-8

[[Page 42]]

with respect to an option described in part II of subchapter D.

[T.D. 6500, 25 FR 11910, Nov. 26, 1960, as amended by T.D. 6527, 26 FR 
413, Jan. 19, 1961; T.D. 6887, 31 FR 8812, June 24, 1966; T.D. 7283, 38 
FR 20825, Aug. 3, 1973]