I was watching a YouTube video by TechLead, and he said that in USA, if a house or stock is passed down as inheritance, then it has an adjusted cost basis of when the person passed away.
So as an example, if Person A bought a house at $300k and 10,000 shares of stock at $10 / share (total $100k) 30 or 50 years ago, then let's say before Person A passes away, if he sells the house and the stock (say the house is $1M and the stock is $500k), then he will have to pay capital gain tax, naturally.
But if he passed away and passed the house and stock to the offspring, then he pays no capital gain tax, no inheritance tax (except in 6 states), and the person who inherits them doesn't pay any tax when he receive the inheritance, and will have a new cost basis of the fair market value (FMV) at the time he receive the inheritance?
Is that true? If that is the case, then the person inheriting the house and stock can sell them, say, 3 months or 5 years later, and if there is no gain, pay $0 tax?
And let's say if the law doesn't change, and the house and the stock is passed down to 5 generations, some 400 years later, and the person who sells them also has no gain between the time he receives the inheritance and when he sells it, also pays $0 tax?