Appraisal for Stepped-Up Basis: What the CPA Needs on the Face of the Report

An appraisal for stepped-up basis gives the CPA a documented fair market value for an inherited house as of the date of death. To use it, the CPA needs to find a short list of items on the face of the report without hunting: the effective date matching the date of death, the date of report, the definition of value and its source, the intended use and intended users, the property and the rights appraised, the comparable sales with their closing dates, how condition was established, any extraordinary assumptions, and the signed certification. The appraisal supplies the value and its reasoning; the CPA decides how it is used.

This article is part of the estate and date-of-death knowledge center. The pillar, date-of-death appraisals explained plainly, covers how a retrospective value is built.

Stepped-up basis in one paragraph

Stepped-up basis is the general rule that an heir's tax basis in inherited property resets to its fair market value at the date of death, the day the owner died. IRS Publication 551 states it that way, with the alternate valuation date as the other option if the personal representative, the executor or court-appointed administrator, elects it; the statute is 26 U.S.C. section 1014. The word "stepped-up" is shorthand: the basis resets to the value on that day, whichever direction that moves it. Everything after that, gain, depreciation, how the figure goes on a return, is the CPA's work.

In a California probate, Probate Code section 8900 provides that inventory property is appraised by the personal representative, the probate referee, an appraiser assigned to the estate under the probate system, or an independent expert. Some CPAs still ask for an independent report, because it sets out the comparable sales and adjustments behind the value.

What the CPA looks for on the face of the report

USPAP, the Uniform Standards of Professional Appraisal Practice, already requires a report to state most of these items. For basis work, each one answers a question the CPA would otherwise have to ask.

1. The effective date. The effective date, the date the opinion of value applies to, should be the date of death. That makes the assignment a retrospective appraisal, an appraisal whose effective date is in the past. A report whose effective date is the inspection date is a current value, and it answers a different question.
2. The date of report. The date of report, the day the report is signed and issued, appears separately, so no reader mistakes when the work was done for the date the value applies to.
3. The definition of value and its source. Fair market value, the price between a willing buyer and a willing seller, neither under compulsion and both reasonably informed, with the source cited. The companion article on what the fair market value definition requires reads it clause by clause.
4. Intended use and intended users. Intended use, what the report will be used for, reads along the lines of estate settlement and documentation of basis. Intended users, the people entitled to rely on it, are named: the personal representative, the trustee, the heirs, the CPA, the attorney. The IRS is not a client of the appraisal; the report is written for the people named on it.
5. The property and the rights appraised. The legal description or parcel identification, and the interest valued, usually the whole property in fee simple. If the CPA needs a fractional interest valued instead, that is a different scope of work, the type and extent of research and analysis, and it is agreed before work begins.
6. Comparable sales with their dates. Each sale's closing date on or before the effective date, with adjustments and reasoning, so a reviewer can see the evidence predates the date being valued.
7. How condition was established. Whether the appraiser inspected the house, when, and what records stood in for the condition on the date of death: photographs, permits, invoices, listing photos.
8. Extraordinary assumptions and hypothetical conditions. An extraordinary assumption is an assumption about uncertain facts that, if false, could change the result; a hypothetical condition is a condition assumed for the analysis that is known to be contrary to fact. Any used are stated where the CPA will see them.
9. The signed certification. The appraiser's certification, the credential and license number, and the statement that the fee does not depend on the value.

Requests that change the scope

Some CPAs ask for more than one value or a different breakdown. Each is possible; each needs to be known at engagement because it changes the scope and the fee, which is set by the scope of the assignment and quoted before work begins.

• A second effective date. The alternate valuation date, the date six months after death that an estate may elect under 26 U.S.C. section 2032. Whether to elect it is the CPA's and the personal representative's decision, never the appraiser's.
• A current value as well. When heirs plan to sell now, a second, current opinion can be added to the same assignment.
• Land value stated separately. If the CPA wants the site value broken out, for a house the heirs will rent, say so; it adds analysis.
• Houses in both counties. An estate holding a Claremont house in Los Angeles County and an Upland or Montclair house in San Bernardino County can be handled by one appraiser, with each county's records read on their own terms.

What the report leaves to the CPA

The report does not compute basis or gain, allocate value among heirs, decide which portion of a jointly held or community property house adjusts, or advise on any election. Those are tax questions. Nothing here is tax advice, and your CPA or attorney decides how the value is used.

The kind of Claremont file that comes in

A typical request: a postwar ranch house north of Foothill Boulevard, held by one family since it was new, already sold by the heirs. The CPA preparing the return asks for fair market value as of the date of death. Listing photos from the sale show condition, but they were taken after some cleanup and paint, so the appraiser separates that work from the condition on the date of death using invoices and family photographs. The permit file shows when a family room addition was finaled, which settles whether that space counts in gross living area, the finished above-grade living space, on the date being valued. Comparables come from the same postwar tracts, closed on or before the date of death.

Older houses near the Village and the Colleges, and hillside homes in Claraboya and Padua Hills, raise their own evidence questions; the article on documenting basis for a Claremont house walks through them, and the Claremont area page explains why each pocket is compared with its own kind.

Next step

CPAs, attorneys and fiduciaries who order regularly can start with the page for professionals. To scope a single estate, see the estate and date-of-death appraisal or call (909) 324-6122. The report is typically three to five business days from the inspection.

Sources

• IRS Publication 551, Basis of Assets (inherited property) (accessed October 30, 2026)
• 26 U.S.C. section 1014, basis of property acquired from a decedent (accessed October 30, 2026)
• 26 U.S.C. section 2032, alternate valuation (accessed October 30, 2026)
• 26 CFR section 20.2031-1, valuation of property (fair market value) (accessed October 30, 2026)
• The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice (USPAP) (accessed October 30, 2026)
• California Probate Code section 8900, appraisal of inventory property (accessed October 30, 2026)

Gordon Hall, California Certified Residential Real Estate Appraiser, BREA No. AR003877 (lookup: https://www2.brea.ca.gov/breasearch/faces/party/view.xhtml?id=23601). Reports are prepared in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP). Nothing here is legal or tax advice; admissibility is always the court's decision.