Alaska Step-Up in Basis

Inherited property in Alaska takes a new federal cost basis equal to its fair market value on the day the owner died. The rule sits in Internal Revenue Code Section 1014(a), and Alaska adds no state income tax on top of it. When an heir sells, capital gains tax reaches only the growth after the death.

Alaska writes no basis rule of its own. What Alaska adds is where the date-of-death number gets written down, a collection affidavit that records no value at all, and an opt-in community property system that can reset the whole of a married couple's property at the first death instead of half. We read the Alaska Court System's probate self-help pages on September 28, 2026, and read the federal Code sections at the Office of the Law Revision Counsel on the same day. The Alaska Statutes themselves were not available to us, so every Alaska rule below is stated as the Court System states it.

What the Step-Up Does

Basis is what the tax system treats as your cost. On a sale you pay capital gains tax on the price minus that basis, so a higher basis means a smaller gain.

A worked case

Your mother bought a house in Fairbanks in 1991 for $90,000. At her death in 2026 it is worth $340,000. Had she deeded it to you during her life, you would take her $90,000 cost, and a sale at $340,000 would show a $250,000 gain. Internal Revenue Code Section 1015(a) gives a gift "the same" basis it had "in the hands of the donor."

Because you inherited it, your basis becomes $340,000. Sell at that price and the gain is zero. Sell two years later at $365,000 and you report $25,000. These figures show the mechanism and are not a computation of anyone's tax.

The Alaska Court System walks through the same idea with a parcel of land bought for $10,000, worth $60,000 at the owner's death and sold by the heir for $100,000. The heir "will pay tax only on the $40,000 difference between the new basis ($60,000) and the selling price ($100,000)," instead of on $90,000.

The federal text

Internal Revenue Code Section 1014(a) gives property acquired from a decedent a basis equal to "the fair market value of the property at the date of the decedent's death." Three alternatives sit beside it: the Section 2032 alternate valuation figure, the Section 2032A special-use figure for qualifying farm and business real property, and the decedent's own basis to the extent of a Section 2031(c) conservation easement exclusion.

The reset runs both ways. An asset worth less at death than the owner paid drops to the lower value, and the loss the owner could have claimed on a lifetime sale disappears.

Alaska Taxes Neither the Gain Nor the Estate

Here is why the Alaska part of this question is short. The Alaska Court System's tax page answers "Does Alaska have a state individual income tax?" with one word: "No." So the stepped-up basis matters on the federal return only, plus the return of any other state where you live or earn income.

The same page answers the estate tax question: "As of 2005, Alaska no longer collects a state estate tax." That is a separate tax from the one on a later sale, and the Alaska estate tax guide covers it.

The Inventory Is Where Alaska Records the Value

The step-up is worth only as much as your proof of the figure, and an Alaska probate hands you a place to write it down.

The Court System's inventory page says the personal representative must prepare a list of everything the person owned, with "the value of each item of property at the time of the person's death," within three months of appointment. Form P-370, Inventory of Property, is the Court System's form for it. Each item needs a description, its "fair market value" on the date of death, and any lien against it. The page defines fair market value as "the reasonable price that an unrelated person would pay for the property in its 'as is' condition at the date of the person's death."

Three details matter for basis:

• Appraisers go on the record. If a professional appraiser valued an item, the appraiser's name and address go next to it on the inventory.
• You can ask for a copy. The personal representative "must send a copy to any interested person who asks for it" and may also file the original with the court. If you expect to inherit something you will sell, ask.
• Mistakes get corrected. The page tells the personal representative what to do on finding more property or learning that a listed value is wrong.

Alaska executor duties covers the rest of the job, and the Alaska probate timeline shows where the three-month inventory falls.

What to gather, by asset

The Court System's valuation chart lists acceptable ways to value each kind of property for the inventory. For real property it lists the tax assessment at the date of death, recent sales to unrelated buyers, an appraisal dated to the death, or a broker's opinion of value dated to the death. For an heir who plans to sell, the appraisal or broker's opinion gives you a figure made for the exact question the IRS asks.

• A house, cabin or lot. An appraisal or broker's opinion of value as of the date of death.
• Bank and investment accounts. The Court System says to use "the balance at the date of death including interest earned through that date." For listed stocks, ask the brokerage for a date-of-death valuation statement.
• A business or partnership interest. A recent sale price, the value in a partners' agreement, or a professional business appraisal.
• Vehicles, boats and equipment. The Court System points to online pricing services and comparable listings.
• Jewelry, art, firearms and collections. List these separately and have them appraised where the value is real.

When you hire anyone, ask for an opinion of fair market value as of the date of death and ask for that date on the face of the report.

The Collection Affidavit Leaves No Dated Value

Alaska lets a successor collect personal property without a court case 30 days after the death. The Court System's affidavit page sets two caps, both after debts and liens: registered vehicles worth $100,000 or less, and other personal property worth $50,000 or less. Any real property that would need probate closes the route, "no matter how small the value."

The affidavit confirms that the totals fall under the caps. It is not an appraisal, and nothing in the process asks for item-by-item values dated to the death. That works well for a bank account. It is a thin file for a later sale. If a family uses the affidavit and then sells an inherited truck, a boat or a gun collection two years later, the only number anyone wrote down may be the cap itself. Get a dated valuation for anything you expect to sell. The Alaska small estate routes explain who qualifies.

The Deed Decides How Much Resets

Federal law decides how much of a jointly held property steps up. Alaska law decides what kind of ownership you have.

Spouses holding as tenants by the entirety

The Court System lists tenancy by the entirety as a way spouses hold real property that passes to the survivor "automatically," and says household items and other untitled personal property usually pass to a surviving spouse because "spouses are assumed to hold this property as tenants by the entirety."

Internal Revenue Code Section 2040(b) calls property held by "the decedent and the decedent's spouse" as tenants by the entirety, or as the only two joint tenants with right of survivorship, a qualified joint interest, and includes one half of its value in the gross estate. One half steps up. The survivor's half keeps its original cost.

Alaska community property: the full reset

This is the Alaska-specific angle. Alaska is not a community property state by default. The Court System's glossary describes Alaska community property as "a special form of ownership available only to spouses and only if both spouses choose to treat the property as community property under the Alaska Community Property Act," by signing a community property agreement or trust. Couples can also hold it with a right of survivorship, so it passes to the survivor without probate.

The tax result is what makes it worth knowing about. The Court System says that for ordinary joint ownership, "only the tax basis in the part owned by the spouse who died (usually one-half) is adjusted," but "if the property is community property, the tax basis of the entire property is adjusted to the value at the date of the first spouse's death."

The Court System runs the numbers on land bought for $10,000, worth $60,000 at the first death and later sold for $100,000:

The federal hook is Internal Revenue Code Section 1014(b)(6), which gives a new basis to "the surviving spouse's one-half share of community property held by the decedent and the surviving spouse under the community property laws of any State," if at least half of the whole community interest was included in the decedent's gross estate.

Two cautions. First, most Alaska couples never signed an agreement or trust, and without one their property is not community property, whatever state they married in. Second, the Court System calls its own explanation "simplified" and "not meant to replace tax advice." Before a surviving spouse reports a full reset, have a CPA or tax attorney confirm the treatment against the signed agreement or trust. Alaska surviving spouse rights covers the spouse's other rights, from the elective share to the allowances.

Other joint owners

A parent and child who hold as joint tenants with right of survivorship fall under Internal Revenue Code Section 2040(a). The whole value is included in the parent's gross estate except the part shown to have originally belonged to the survivor and not to have come from the decedent for less than full value. A child who contributed nothing toward the purchase sees the full value included, and the full value becomes the basis. A child who paid for part keeps that part at its original cost. Keep the purchase records.

Transfer on death deeds

The Court System's transfer on death deed page says the deed "has no effect until you die," that the owner "can revoke it at any time," and that the owner is "free to transfer the property to someone else during your lifetime." The owner kept everything until death, so the property is included in the gross estate and takes a date-of-death basis under Internal Revenue Code Section 1014(b)(9).

The same page warns that creditors have one year after the death to claim against property passed by a TOD deed, which can slow a sale. That delay does not move the valuation date, so order the appraisal as of the death rather than as of the closing. Alaska transfer on death deeds covers recording and revocation.

What Does Not Step Up

• Tax-deferred retirement accounts. Internal Revenue Code Section 1014(c) says the section "shall not apply to property which constitutes a right to receive an item of income in respect of a decedent under section 691." The Court System makes the same point: property with "built-in" income tax, "such as a retirement account to which the person who died contributed tax-free income," still owes that tax after the death.
• Property given away during life. A completed gift carries the donor's basis under Section 1015(a). That is the trade against the step-up, and it is why deeding a family home to a child early so often costs more in tax than it saves.
• Appreciated property gifted to the decedent within a year of death. Section 1014(e) blocks the round trip: where the donor or the donor's spouse gets the property back, the basis is the decedent's adjusted basis immediately before death.

The Federal Estate Tax Is a Different Question

The step-up decides your income tax when you sell. The federal estate tax decides what the estate owes because of the death. The IRS lists a $15,000,000 filing threshold for a 2026 death, so few Alaska estates file a return at all. The Alaska estate tax calculator runs that screen for one estate.

Two points connect the two taxes. Where a federal estate tax return is filed and the property increased the tax, Internal Revenue Code Section 1014(f) says your basis cannot exceed the value finally determined for that tax. And whatever value the personal representative puts on the inventory or on any return should come from the same date-of-death appraisal you rely on at the sale, so the numbers in the file agree.

Selling, and the Rules That Follow the Death

Basis becomes a number only when there is a sale, and selling inherited property in Alaska covers the transaction. Next steps worth knowing before you list:

The holding period is automatic. Internal Revenue Code Section 1223(9) says a person whose basis is determined under Section 1014 and who sells within one year of the death "shall be considered to have held such property for more than 1 year." Long-term treatment does not depend on how fast the family sells.

The home-sale exclusion usually does not reach an heir. Section 121(a) excludes gain only where the seller "owned and used" the property as a principal residence for periods aggregating two years during the five years before the sale. An heir who never lived there does not qualify, and the step-up already removed most of the gain the exclusion would have covered.

A surviving spouse gets extra room. Section 121(d)(2) counts the deceased spouse's years of ownership and use toward the survivor's. Section 121(b)(4) raises the survivor's exclusion from $250,000 to $500,000 on a sale "not later than 2 years after the date of death" of the spouse, if the couple met the joint-return requirements immediately before the death.

The surviving spouse records a new deed to sell. The Court System says property held as tenants by the entirety or as Alaska community property with a right of survivorship passes to the survivor with nothing to file, but a survivor who wants to sell must record a new deed and a certified copy of the death certificate with the recorder's office in the recording district where the property sits.

The alternate valuation date rarely applies. Section 2032 lets an executor value the gross estate six months after the death, but subsection (c) allows the election only where it lowers both the gross estate and the estate and generation-skipping taxes. No federal return means no election.

Frequently Asked Questions

Does Alaska tax the gain when I sell inherited property?

No. The Alaska Court System says Alaska has no state individual income tax, so no Alaska return reports the sale. The federal income tax still applies, and under Internal Revenue Code Section 1014(a)(1) your federal basis is the fair market value of the property at the date of death. A state where you live may tax the gain under its own rules.

How does Alaska community property change the basis?

It can double the reset. The Alaska Court System explains that when spouses own property together, usually only the half owned by the spouse who died is adjusted to date-of-death value. If the property is community property under the Alaska Community Property Act, the basis of the entire property is adjusted at the first death. Alaska community property exists only when both spouses signed a community property agreement or trust, so most Alaska couples do not have it.

Does the house my spouse and I own as tenants by the entirety fully step up?

Usually only half. Internal Revenue Code Section 2040(b) treats property held by a decedent and spouse as tenants by the entirety, or as the only two joint tenants with right of survivorship, as a qualified joint interest and includes one half of its value in the gross estate. The survivor's half keeps its original cost unless the couple signed a community property agreement or trust.

What value should the personal representative put on the inventory?

Fair market value on the date of death. The Alaska Court System says the inventory must list each item at the reasonable price an unrelated person would pay for it in its as-is condition at the date of death, and that an appraiser's name and address go next to any item a professional appraised. The personal representative prepares it within three months of appointment and sends a copy to any interested person who asks.

Is the small estate affidavit value my basis?

No. The Alaska collection affidavit only confirms that registered vehicles total $100,000 or less and other personal property totals $50,000 or less after debts and liens. Your basis under Internal Revenue Code Section 1014(a)(1) is fair market value at the date of death, so get a written, dated value for anything you expect to sell.

Do inherited IRAs get a step-up in Alaska?

No. Internal Revenue Code Section 1014(c) says the basis rule does not apply to a right to receive income in respect of a decedent under section 691. The Alaska Court System gives the same warning in plain terms: a retirement account funded with untaxed income still carries that income tax after the owner dies.

Related Guides

• Selling Inherited Property in Alaska
• Alaska Estate Tax and Federal Estate Tax
• Alaska Surviving Spouse Rights
• Alaska Executor Duties
• Alaska Transfer on Death Deed
• Small Estate Routes in Alaska
• How to Avoid Probate in Alaska
• Alaska Probate Guide

This page describes Alaska and federal law broadly rather than advising on one estate. Basis outcomes turn on dates, deeds, signed agreements and figures that change from family to family, so take yours to a CPA or a tax attorney before a sale.

Sources:

• Title: Federal Tax Matters. Publisher: Alaska Court System. Publication Date: Not listed; accessed 2026-09-28. URL: https://courts.alaska.gov/shc/probate/tax-matters.htm
• Title: Glossary of Probate Terms. Publisher: Alaska Court System. Publication Date: Not listed; accessed 2026-09-28. URL: https://courts.alaska.gov/shc/probate/glossary.htm
• Title: Inventory and Management of Assets. Publisher: Alaska Court System. Publication Date: Not listed; accessed 2026-09-28. URL: https://courts.alaska.gov/shc/probate/inventory.htm
• Title: Transferring Ownership of Assets. Publisher: Alaska Court System. Publication Date: Not listed; accessed 2026-09-28. URL: https://courts.alaska.gov/shc/probate/transferring-assets.htm
• Title: Collecting Personal Property without a Court Case. Publisher: Alaska Court System. Publication Date: Not listed; accessed 2026-09-28. URL: https://courts.alaska.gov/shc/probate/affidavit.htm
• Title: Transfer on Death Deed. Publisher: Alaska Court System. Publication Date: Not listed; accessed 2026-09-28. URL: https://courts.alaska.gov/shc/probate/tod-deed.htm
• Title: 26 U.S.C. 1014, Basis of property acquired from a decedent. Publisher: Office of the Law Revision Counsel, United States House of Representatives. Publication Date: Laws current as of September 27, 2026; accessed 2026-09-28. URL: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section1014&num=0&edition=prelim
• Title: 26 U.S.C. 1015, Basis of property acquired by gifts and transfers in trust. Publisher: Office of the Law Revision Counsel, United States House of Representatives. Publication Date: Current through the prelim release; accessed 2026-09-28. URL: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section1015&num=0&edition=prelim
• Title: 26 U.S.C. 2040, Joint interests. Publisher: Office of the Law Revision Counsel, United States House of Representatives. Publication Date: Current through the prelim release; accessed 2026-09-28. URL: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section2040&num=0&edition=prelim
• Title: 26 U.S.C. 1223, Holding period of property. Publisher: Office of the Law Revision Counsel, United States House of Representatives. Publication Date: Current through the prelim release; accessed 2026-09-28. URL: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section1223&num=0&edition=prelim
• Title: 26 U.S.C. 121, Exclusion of gain from sale of principal residence. Publisher: Office of the Law Revision Counsel, United States House of Representatives. Publication Date: Current through the prelim release; accessed 2026-09-28. URL: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section121&num=0&edition=prelim
• Title: 26 U.S.C. 2032, Alternate valuation. Publisher: Office of the Law Revision Counsel, United States House of Representatives. Publication Date: Current through the prelim release; accessed 2026-09-28. URL: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section2032&num=0&edition=prelim
• Title: Estate tax. Publisher: Internal Revenue Service. Publication Date: Last reviewed or updated December 22, 2025; accessed 2026-09-28. URL: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax

It is not legal advice.