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Under US tax law, when property is inherited, what are the rules for valuation and deductibility when giving it to charity?

I have been assuming that when there is no taxable valuation for inherited property and no cost basis to the inheritor, then, when donating that property to a charity, there would be nothing to claim as a deduction. So, for low-valued property that is inherited tax free, donating that property would not provide a tax deduction.

Conversely, I also assume that if there is a valuation or cost basis that makes the inheritance of that property taxable, then donating that property would result in a deduction that offsets the taxable valuation.

I am only somewhat familiar with the case of Richard Nixon's gifts of presidential papers to the US government, around the time of the Tax Reform Act of 1969. This was supposedly a major overhaul of the U.S. tax code, and might be considered a legal foundation for taxation on gifts of artifacts created by the giver (and thus might have some "fair market value" to be used for valuation). Beyond that, I am not familiar with the subject.

However, inherited property is not created by the giver and there is no cost basis, so I'm unsure how the tax code handles this.

Where can I find the rules for this in the tax code?

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Inherited property gets a step up in basis to the current market value of the property at the date of death of the grantor.

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  • I'm looking for the statute in the tax code that backs that up. Can you provide it? Also, I know that is not true for some or all real estate. (I don't know where this is in the code, though.) – Jim Jun 15 '18 at 14:22

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