In planning for gifts of property, if the donor has a choice among more than one type of property to be transferred as the gift(s) (e.g., if she has a portfolio of several investment securities), it would probably be more advantageous, for tax purposes, to transfer assets having less unrealized appreciation (i.e., current value in excess of basis). This general concept, which becomes more compelling the greater the age of the donor, is premised on the fact that the assets still owned when the donor dies will take a stepped-up basis, thereby permanently eliminating income tax on all unrealized appreciation. Thus, if there is a choice, the family will be better off in the long run if the assets which are transferred as gifts are those with the least unrealized appreciation. Not only will this minimize the income tax cost to the donees upon liquidation of the property for cash, but, more importantly, by retaining until death those assets with the greatest unrealized appreciation, the donor will maximize the benefit to be derived from the stepped-up basis loophole.
Key concepts to understand about income tax "Basis":
1- What is Cost Basis?
2 - How is Cost Basis Determined?
3 - What is Carryover Basis?
4 - Basis of Property Acquired In A Tax-Free Exchange
5 - Basis Adjustments When Taxable "Boot" Received
6 - Basis of Property Transferred In Trust
7 - Stepped-Up Basis; Property Transferred Upon Death
8 - Cost Basis Consideration In Planning Family Gifts
All answered here: What is Basis?