client passed away with non-ira annuity written on July 23,2007.

date of death: 4-24-16

The cost basis is: $63,000
contract value: $80,000
date of death value: $80,088.22

They included the annuity in the inheritance tax and paid the taxes.

If the client wants to cash in the annuity, will he be taxed on the difference between the cost basis and the contract value?

or

will he have very little tax since the contract value is $80,000 and the date of death value is: 80,088.22?

Thank you for any help
Douglas