The cost basis, which is the original value of an asset when acquired, is used to determine the capital gain for tax purposes when you sell.

With your inherited shares, you need only determine the value of the shares on the date of your family member's death. That inherited, or "stepped-up," price becomes the new cost basis of the shares and is easy to look up.

"Remember that this is different from receiving the stock as a gift," said Mike Busch, a certified financial planner with Vogel Financial Advisors in Dallas. "In that case, you would have to trace the history of the stock and then take the prior owner's cost basis."

The cost basis is a crucial factor whenever you sell.

"Basically, if you don't know your cost basis, the IRS assumes it is all profit, and you have to pay a lot more in taxes," Busch said.

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Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, P.O. Box 874702, Tempe, AZ 85287-4702, or by e-mail at andrewinv@aol.com.