Presently, the new law introduces “carryover basis” for individuals dying in 2010. However in 2010, a carryover  basis will generally take the place of a “step up in basis.” This too is subject to the “sunset” provision when it reverts back to present law.
	Using the modified carryover basis, the asset’s cost basis will be the decedent’s cost basis or the property’s “Fair Market Value”...whichever is less.  The complexity of carryover basis makes it difficult to administer as heirs need to keep track of original cost basis forever!
	The law permits some transfers to qualify for a step-up in basis by a total of $1.3 million.  Any unused losses may also increase the $1.3 million cap.
	An estate can transfer an additional $3 million to a surviving spouse, bringing the step-up in basis for a spouse up to $4.3 million or more (with unused losses).