What is your question?
There are several policy reasons for the step up ... Remember, when the estate system was first revised in 1976, estates of 600,000 were taxable ... so taxing the estate itself (through the 706 for m, federal estate tax - thereby reducing what the heirs receive) and then taxing the those heirs on a potentially huge capital gain once they sell it would be, for many, an effective double taxation
Some believe that their are practical reasons ... When Grandpa passes a farm, that was once a working dairy, that was bought at one price then improvets made, then part of it was sold to a brother , etc, etc trying to figure out what that adjusted basis really is when the heor finally sells, could be a tax administration nightmare
There's another theory that a decedent passing property at death, is probably not dying just to evade taxes, so mandating carryover basis, which would preserve the gain in the beneficiary, is unnecessary
There is no doubt that most estate planning attoryneys around the country all agree on one thing ... the best plan not to get killed in estate taxes is to give it away in those 14,000 pieces (no gift tax form required) year after year until there's no estate to tax (when you're at your deathbed and can't take it with you anyway) ... There are lots and lots of plans GRUTS, GRATS, Charitable remainder trusts, charitable lead trusts, wealth replacement trust in a life insurance trust woth Crummey powers... so that the money given to charity is replaced (tax free) for the heirs .... but the best plan?
Give it away in small piece, under that 14,000 radar screen, when the giftees probably need it most
Hope this helps
My own opinion is that once you are talking about decent sized estate... multiples of millions, why kill the heirs with a tax on the estate (estate taxes have to paid within 9 months of the date of death, you know ... so if that estate is mostly illiquid real estate, ... guess what ... the estate sale vultures are circling) the heirs DESERVE that step-up on whatever may be left
Let me know if you have questions