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Answers
Company: James, Surman & Goldberg CPA
The step-up in basis occurs at the date of death of the decedent. The FMV of the home as of that date is now the new basis of the home for the estate. If the sale of the house occurs subsequently within the estate, then use the new step-up cost basis. Ideally, when the sale occurs shortly after date of death, there is little to no gain/loss reported because of this step-up in basis.
Company: Global TaxFin Advisory Group LLC
One can also make an election on IRS Form 706 to choose six months from death as the alternate valuation date for stepped up basis but it would have to apply to all the estate assets, not just home. Presumably, you only do this if it will reduce the combined estate and future capital gain taxes.