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Hi, my name is Mark. I will be happy to help you with your questions. The children would receive a step up in basis on the date of death. It seems reasonable that the FMV of the stock would be based on the FMV of the asset. If the corporation sells the asset, the corporation would have a tax liability on the gain. If the corporation is dissolved at this point, you are correct that there would not be a second level of tax. The individual shareholders may have a capital gain or loss depending on the amount of proceeds that they receive.