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This includes joint tenancies, tenancies by the entirety, joint bank accounts, etc Fifty percent (50%) of the value of the jointly held property (or property held as tenants by the entireties) is included in the estate of the first of the spouses to die. Tenancies in common, and community property, etc.

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Unlike the tracing complexity of section 2040 (a), the rule here is straightforward Property held in joint tenancy, tenancy by the entirety, or community property with right of survivorship automatically passes to the survivor when one of the original owners dies. Many types of property, such as bank accounts, vehicles, and securities, may pass in this way, but the most common type of property owned jointly with right of survivorship is real estate.

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For spouses, property transfers are exempt from gift taxes, and estate taxes are deferred until the death of the second spouse.

It is important to note that joint property treated as income in respect of decedent under section 691 of the internal revenue code, is an exception to the current rule and thus does not receive the step up in basis.