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§ 8.4 UNIFICATION OF TAXESGenerally, the value of the estate is the fair market value of the property onthe date of death. 141 Special valuation rules are provided for farms and otherqualified real estate. 142Unlisted stocks and securities are valued by taking into consideration thevalue of similar securities of other corporations in the same or similar line ofbusiness. 143(d) Basis of Transferred PropertyOne significant difference between lifetime transfers and transfers that takeplace at death involves the basis of the property transferred. For lifetime transfers,the basis of property in the hands of the transferor is carried over andbecomes the basis in the hands of the transferee.In contrast, transfers that take place at death receive special preferentialtreatment. The basis to the recipient is not a carryover basis, but the fair marketvalue of the property as of the date of death (or the alternate valuation date). 144The recipient of a decedent’s estate enjoys a stepped-up basis in the transferredproperty. Any appreciation in the asset prior to the death of the decedentescapes income tax as a result of the testamentary transfer.§ 8.4 UNIFICATION OF TAXESThe unified federal transfer tax is a progressive tax. As discussed, it taxes thevalue of transferred property in brackets ranging from a low of 18 percent to ahigh of 55 percent for estates of more than $3 million.A credit is available to offset the taxes imposed under the unified estate andgift transfer tax. Known as the unified credit, it is available to offset, dollar for dollar,taxes imposed on both lifetime gift transfers and transfers by reason of death. 145This credit is in the form of an applicable credit amount, which is based on aseries of applicable exclusion amounts. Under the unified credit, tax-free transfersup to the applicable exclusion amount in asset value can be made during anindividual’s life and/or upon that person’s death.Under the unified transfer tax system, other credits are available to offset orreduce tax liability:• Credit for state death taxes 146• Credit for foreign death taxes 147• Credit for prior transfer 148• Credit for death taxes on remainders 149141 IRC § 2031; Reg. § 20.2031-1(b).142 IRC § 2032A.143 IRC § 2031(b).144 IRC § 1014.145 IRC §§ 2010, 2505.146 IRC § 2011.147 IRC § 2014.148 IRC § 2013.149 IRC § 2015. 245