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Wyoming Step-Up in Basis for Inherited Property
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Wyoming Step-Up in Basis for Inherited Property

Wyoming step-up in basis: inherited assets reset to date-of-death value under IRC 1014, and Wyoming levies no income tax on the later gain.

By Settled Editorial

When you inherit property in Wyoming, its tax basis resets to the fair market value on the date of death. The reset comes from Internal Revenue Code Section 1014, and it erases the capital gains tax on everything the asset gained while the owner held it. You owe tax only on growth after the death, only when you sell, and only to the federal government, because Wyoming levies no personal income tax.

The basis rule is federal. No Wyoming statute writes one. What Wyoming law adds is a set of rules that decide how much of an asset resets and how you prove the number: a deed rule that turns "husband and wife" into a tenancy by the entirety, a short act that preserves community property brought in from another state, a transfer on death deed that keeps the owner in full control until death, and a probate appraisal report that puts the date-of-death value on paper.

What The Step-Up Does

Basis is what the tax system treats as your cost in an asset. When you sell, you pay capital gains tax on the sale price minus that basis. The step-up changes the starting number.

A Wyoming example

Say your father bought a house in Casper in 1998 for $140,000. At his death in 2026 it is worth $520,000. If he had deeded it to you during his life, you would take his $140,000 cost, called a carryover basis, and a sale at $520,000 would show a $380,000 gain.

Because you inherited the house instead, your basis steps up to $520,000. Sell at that price and your gain is zero. Sell two years later for $550,000 and you report a $30,000 gain rather than $410,000.

The federal rule

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." It allows three alternatives: the Section 2032 alternate valuation figure, the Section 2032A special-use figure for farm and ranch real property, and the decedent's own basis to the extent of a conservation easement exclusion under Section 2031(c).

The adjustment runs both ways. An asset worth less at death than the owner paid steps down to the lower figure, and the loss the owner could have claimed disappears.

One more federal rule helps heirs who sell fast. Internal Revenue Code Section 1223(9) treats property with a Section 1014 basis as held for more than one year, even if you sell it within a year of the death. So any gain qualifies for the lower long-term capital gains rates.

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Wyoming Adds No State Tax On The Gain

Here is where Wyoming heirs come out ahead of heirs in most states.

  • No state income tax. Title 39 of the Wyoming Statutes, the tax title, has a chapter 7 captioned "INCOME TAXES" that holds one section, 39-7-101, repealed by Laws 1998. Chapter 12, captioned "INCOME TAX," holds only W.S. 39-12-101, "Preemption by state." That section reserves the field of income and earnings taxes to the state and says no county, city, town or other political subdivision may impose, levy or collect one. The state itself levies none, so a sale of inherited property produces no Wyoming capital gains tax.
  • No inheritance tax. Nothing is charged for receiving property. Chapter 19 of Title 39 is captioned "INHERITANCE TAXES," but the only tax it imposes is the estate tax in W.S. 39-19-103.
  • An estate tax that computes to zero. W.S. 39-19-103 sets the Wyoming tax at the maximum state death tax credit allowed against the federal estate tax. That credit no longer exists, so the Wyoming tax comes to nothing. Our page on Wyoming and federal estate tax walks through the statute and the federal threshold, and the Wyoming estate tax page checks an estate against that threshold.

The federal capital gains tax still applies to growth after the date of death. Estate tax and basis are separate questions: the federal estate tax decides whether the estate owes a transfer tax, and this page decides what you pay when you sell.

How Much Of A Jointly Owned Wyoming Home Steps Up

This is where couples and families most often guess wrong. The answer depends on the deed and on who the co-owners are.

"Husband and wife" on a deed creates a tenancy by the entirety

W.S. 34-1-140, "Establishing joint tenancy or tenancy by entirety in real or personal property," lets an owner create a joint tenancy or a tenancy by the entirety by naming the co-owners, including himself, in the instrument of conveyance. Subsection (b) adds a default that matters for basis. Unless the deed specifies another form of ownership, naming the grantees as "husband and wife," "spouses" or similar language creates a tenancy by the entirety.

So pull the deed and read the vesting language before you assume anything.

Spouses: one-half steps up

IRS Publication 551 calls property held by a married couple as tenants by the entirety, or as the only two joint tenants with right of survivorship, a qualified joint interest. One-half of the value goes into the deceased spouse's gross estate, no matter who paid for it or which spouse dies first. That half steps up to its date-of-death value. The survivor's own half keeps its original cost.

On the Casper house, if your parents held it as husband and wife and your mother survives, her new basis is $70,000 (half the original cost) plus $260,000 (half the date-of-death value), or $330,000.

Anyone else: the payment rule

For joint tenants who are not a married couple, Internal Revenue Code Section 2040(a) includes the whole value in the first owner's gross estate except the part shown to have come from the survivor. A son who paid nothing toward a Laramie house held jointly with his mother sees the full value included in her estate, and the full value becomes his basis.

Recording the death

Survivorship title does not clear itself. W.S. 2-9-102, "Affidavit of survivorship; recordation; copy of death certificate to be attached," lets any interested person record an affidavit with the county clerk describing the property and the vesting deed, with a certified death certificate attached. W.S. 2-9-101 offers a court decree instead. Neither one sets a value, so get a date-of-death appraisal at the same time.

Wyoming is not a community property state

IRS Publication 551 names the community property states as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Wyoming is not on that list, so the full step-up on both halves that community property can receive at the first death is not available on ordinary Wyoming title.

Community Property You Brought To Wyoming

Idaho sits next door and is on that list. A couple who built up savings there and then moved to Wyoming is a common story, and Wyoming has a short act for it.

W.S. 2-7-720 names it the "Disposition of Community Property Rights at Death Act." Under W.S. 2-7-721, "Application of act," it reaches personal property, wherever situated, that was acquired as or became and remained community property under another jurisdiction's law, property bought with its income or proceeds, and Wyoming real property acquired with those proceeds. W.S. 2-7-722 adds two rebuttable presumptions. Property a spouse acquired while domiciled in a community property jurisdiction is presumed covered. Property acquired while domiciled somewhere without community property, and titled with survivorship rights, is presumed not covered.

W.S. 2-7-723, "Distribution of property upon death of a married person," makes one-half of covered property the surviving spouse's, outside the decedent's will. The other half passes by will or intestacy, and it is not subject to the survivor's right to elect against the will.

Watch the clock on this one. W.S. 2-7-724(a) says neither the personal representative nor the court has a duty to find out whether property is covered. Under 2-7-724(b), a surviving spouse who claims covered property must file a written claim in duplicate with the clerk of court within the time limited in the notice to creditors, and a claim not filed in time "is barred forever."

Whether the surviving spouse's half also takes a federal step-up under Internal Revenue Code Section 1014(b)(6) turns on how the property was acquired and held. That is a question for a CPA with the full acquisition history. The rest of what a spouse takes in Wyoming is in Wyoming surviving spouse rights.

Skipping Probate Does Not Cost The Step-Up

Most assets that pass outside probate still reset.

Transfer on death deeds

W.S. 2-18-103, "Transfer on death deed," lets the owner revoke the deed at any time (subsection (f)), requires no signature, consent or notice to the beneficiary during the owner's life (subsection (k)), and vests title in the beneficiary "only on the death of the owner" (subsection (o)). The owner keeps everything until death, so the property is included in the gross estate and takes a date-of-death basis under Section 1014(b)(9). Our Wyoming transfer on death deed guide covers the affidavit and certificate of clearance the beneficiary records afterward.

Revocable living trusts

Section 1014(b)(2) covers property the decedent put in a trust while keeping the income and the power to revoke it at all times before death. So assets in a Wyoming revocable living trust step up at the grantor's death, and the successor trustee should record the values as the trust is settled. Wyoming trust administration explains what the trustee owes the beneficiaries.

Where The Date-Of-Death Value Gets Written Down

The step-up is worth exactly as much as your proof of the number. A Wyoming probate produces that proof in two sworn filings.

The inventory

W.S. 2-7-403, "Return of inventory of estate by representative; failure to comply; disposition of fines," requires the personal representative to return to the court within 120 days after appointment a true inventory, under oath, of the whole estate that has come into the representative's possession or knowledge. When a spouse's elective share under W.S. 2-5-101 is in play, the deadline shortens to 75 days after the will is admitted.

The report of appraisal

W.S. 2-7-404, "Report of appraisal; verification of values of estate assets," is the Wyoming document that carries your basis. Within 120 days after the inventory, the personal representative files under oath a report of appraisal of the inventoried assets:

  • Assets with a readily determinable market value, such as listed stock, get a date-of-death value stated in writing by one disinterested person.
  • Assets without one, such as a house, ranch land or a closely held business, go to disinterested appraisers who determine fair market value as of the date of death. A separate written report for each asset, showing how the appraiser reached the value, is attached.

Different appraisers can value different assets, and the report is filed with the clerk of court. Ask the personal representative for a copy while the estate is open and keep it with the deed. Our guide to Wyoming executor duties covers preparing both filings, and Wyoming probate accounting shows how those values carry into the final report.

Small estates produce no appraisal

A Wyoming estate worth $400,000 or less can pass by affidavit under W.S. 2-1-201 with no personal representative, no inventory and no appraisal report. The affidavit states only that the whole Wyoming estate falls under the limit. If you collected property that way, hire your own appraiser for the date of death now, while comparable sales are still easy to find. The Wyoming small estate affidavit page explains the route.

Form 8971 Applies Only To Large Estates

Internal Revenue Code Section 1014(f) caps your basis at the value finally determined for estate tax, or the value reported to you on a Section 6035 statement, but only for property whose inclusion increased the federal estate tax.

The IRS instructions for Form 8971 say an executor required to file Form 706 must file Form 8971 and give each listed beneficiary a Schedule A. The form is due by the earlier of 30 days after Form 706 is due (including extensions) or 30 days after it is filed. It is not required when the gross estate plus adjusted taxable gifts and specific exemption falls below the exclusion amount for the year of death, or when Form 706 is filed only to elect portability. For a 2026 death that exclusion is $15,000,000, so most Wyoming families never see a Schedule A.

What Does Not Step Up

  • Retirement accounts and other income in respect of a decedent. Section 1014(c) says the rule does not apply to a right to receive income in respect of a decedent. A traditional IRA or 401(k) is taxed as federal income on withdrawal, with no Wyoming tax added.
  • Gifts bounced back. Under Section 1014(e), appreciated property you gave the decedent within one year of the death, which then returns to you or your spouse, keeps the decedent's old basis.
  • Property given away during life. A lifetime gift carries the giver's basis. That is why a deed to a child shortly before death can cost the family far more in capital gains tax than it saves in probate.

What To Gather, By Asset

  • Real estate and ranch land. A written appraisal as of the date of death from a disinterested appraiser. A county assessor's figure is not a date-of-death appraisal.
  • Listed stocks and funds. A date-of-death valuation statement from the brokerage.
  • A business interest. A written valuation from a qualified appraiser.
  • Livestock, equipment and vehicles. Appraisals as of the date of death, plus photos taken where the decedent left them.
  • The deed and any recorded affidavit. These show how title was held, which decides whether half or all of a home stepped up.

Next steps: when you are ready to list the property, selling inherited property in Wyoming covers who can sign and what the title company will ask for.

Frequently Asked Questions

Does Wyoming tax the gain when I sell inherited property?

No. Wyoming levies no personal income tax. Title 39, chapter 7, captioned INCOME TAXES, holds a single section repealed by Laws 1998, and chapter 12 holds only W.S. 39-12-101, which preempts the income tax field for the state and bars every county, city and town from levying one. The federal capital gains tax still applies to growth after the date of death.

Does Wyoming have an inheritance tax or estate tax that affects basis?

No tax reaches you for receiving the property. W.S. 39-19-103 still imposes an estate tax measured by the federal state death tax credit, and that credit no longer exists, so the Wyoming tax computes to zero. Basis is a separate federal income tax question under Internal Revenue Code Section 1014.

Where does the date-of-death value get written down in a Wyoming probate?

In two filings. W.S. 2-7-403 requires the personal representative to return a sworn inventory to the court within 120 days after appointment. W.S. 2-7-404 then requires a sworn report of appraisal within 120 days after that inventory, stating each asset's value as of the date of death, with a written appraiser's report for any asset that lacks a readily determinable market value. The report is filed with the clerk of court.

My spouse and I owned our Cheyenne home as husband and wife. How much steps up?

One-half. W.S. 34-1-140(b) says a deed naming the owners as husband and wife, spouses or similar language creates a tenancy by the entirety unless the deed specifies another form. IRS Publication 551 treats a tenancy by the entirety as a qualified joint interest, so one-half of the value goes into the deceased spouse's gross estate and steps up. The survivor keeps the original cost on the other half.

Does property passed by a Wyoming transfer on death deed get a step-up?

Yes. Under W.S. 2-18-103 the owner can revoke the deed at any time, the beneficiary's consent is not needed for anything during the owner's life, and title vests in the beneficiary only on the owner's death. The owner keeps full ownership 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).

Do inherited retirement accounts get a step-up?

No. A traditional IRA, a 401(k) and similar tax-deferred accounts are income in respect of a decedent. Internal Revenue Code Section 1014(c) says the basis rule does not apply to them, and the beneficiary pays federal income tax on withdrawals. Because Wyoming has no income tax, no state tax is added on top.

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Sources:

It is not legal advice.

Information current as of September 28, 2026

Settled Estate is not a law firm, and this content is for informational purposes only and does not constitute legal advice. Probate laws and procedures in Wyoming can change. Consult with a qualified attorney for advice specific to your situation. Full disclaimer.

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