Stepped-up basis on inherited artwork?

[Chris sick]

My client's husband recently passed away a month ago. He had no will, so everything he had passed to his wife.

As part of her husband's belongings, the client received a bronze statue, created by a very famous artist.  Her husband had originally received this artwork as a gift from his former father-in-law 20 years ago, when he was married to his 1st wife.  The client is wife #2.

Client is in a financial situation where she has to sell the artwork. Christie's auction house wants to sell her bronze statue and believes they can get between $40K -$60K pre-commission. She's worried about the tax effect. I am thinking there is no tax effect since she inherited the artwork when her husband passed and it has a stepped-up basis to the current market value. They live in a community property state (AZ), but since the husband received the artwork before they were married, I think it's not joint property.

I want to make sure I'm on the right track with the basis.

[Just-Lisa-Now- · Accepted solution]

Sounds right to me.  a quick google search didnt show me anything that says collectibles wouldnt get stepped up basis same as any other inherited asset.

[Chris sick]

Thank you.  My concern is that it meets all the requirements for a community property state in AZ -that it isn't considered community property.

[sjrcpa]

Even it were community property she'd still get a full step up.

[Chris sick]

Thank you!

[BobKamman]

There were no children from the previous marriage?  They might have a claim on the separate property (and his half of the community property, as well).  But the basis, for whoever is entitled to it, gets stepped up 100% at his death.