Stepped-up cost basis
The cost basis of the account that you're inheriting refers to how much the account owner paid for the investments in the account. The stepped-up cost basis is the cost basis adjusted to the fair market value available when you inherit the assets.
You may benefit from a stepped-up cost basis if the fair market value of the investments on the day the account owner died is more than the account owner paid for the investments. Because of the step-up, you may be able to avoid or minimize capital gains taxes if you sell the investments.
Consult with a tax advisor if you have questions about the IRS rules regarding stepped-up cost basis.