How Does Step-Up in Basis Work in Wyoming?

State capital gains tax is separate from federal. Wyoming does not tax capital gainsWY Department of Revenue — divisions list (Excise, Mineral, Property, Liquor, Admin only; no income tax)Verified May 4, 2026. There is no general state income tax and no separate tax on long-term capital gains. Federal capital gains tax still applies, but no state-level tax is owed on the gain.

For tax purposes, inheriting assets is usually better than receiving them as a lifetime gift. Inherited property gets a step-up in basis to fair market value at death under IRC § 101426 USC § 1014Verified May 4, 2026; gifted property carries the donor's original basis under IRC § 101526 USC § 1015(a)Verified May 4, 2026. If the donor bought stock at $10,000 that's now worth $200,000, a recipient who sells after a gift owes capital gains tax on the full $190,000 of appreciation. The same recipient inheriting the same stock owes tax only on appreciation after the date of death. A revocable living trust preserves the step-up — assets held in the trust during life still receive the basis adjustment at death.

No short-term gain applies. IRC § 1223(9)26 USC § 1223(9)Verified May 4, 2026 treats inherited property as long-term from the date of death, so a quick sale by an heir in Wyoming still receives federal long-term rates of 0%, 15%, or 20% (IRC § 1(h))IRC § 1(h); IRS Topic No. 409Verified May 4, 2026. The rule keeps the step-up's value intact even when the heir wants to liquidate quickly.

For publicly traded securities, the executor or beneficiary uses the average of the high and low trading prices on the date of death (IRS Pub. 551)IRS Pub. 551 (Basis of Assets); Form 8971 / Schedule AVerified May 4, 2026. For real estate, a qualified appraisal as of the date of death is the standard. For privately held business interests, a formal valuation by an independent appraiser is typically required, especially if a federal estate tax return (Form 706) is filed. Keep these valuations in your records — you'll need them when you eventually sell to substantiate your basis on Schedule D.

Under IRC § 2032§ 1014(a)(2); § 2032Verified May 4, 2026, an executor may elect the alternate valuation date (AVD): all estate assets are revalued six months after the date of death. The election is all-or-nothing — it must apply to the whole estate — and it is only available when it reduces both the gross estate and the resulting federal estate tax. If AVD is elected, the heir's stepped-up basis tracks the AVD value rather than the date-of-death value. The election is only relevant on estates large enough to require a Form 706, currently those over $15 million per individual.

IRC § 1014(e)§ 1014(e)Verified May 4, 2026carves out one-year deathbed transfers from the step-up rule. If you gift appreciated property to someone, they die within one year, and the property passes back to you or your spouse, the heir's basis is the decedent's adjusted basis — not the date-of-death fair market value. The provision only fires on that specific loop-back fact pattern; gifts to a dying relative whose estate goes to other heirs are unaffected.