My wife will inherit her deceased father's stock portfolio. Based on brokerage statements, there are substantial unrealized capital gains. Will my wife's basis become the FMV of the investments as of the date of death? Any recommended web sites explaining the relevant code?
2006-10-21 15:19:09 · 6 answers · asked by iiifrdst 1 in Business & Finance ➔ Taxes ➔ United States
Current law applies to assets inherited from decedents dying before January 1, 2010. Until then the original basis of inherited assets is the fair market value of the assets on the date of death of the deceased, or six months thereafter if the alternative valuation date is elected by the executor. If the estate filed a Federal estate tax return this value can be taken from it. If not then the fair market value may have been reported on a state estate or inheritance tax form. Otherwise, the best available evidence of fair market value is used.
As a result of this step-up the appreciation in the value of the stock while owned by the deceased is not subject to income tax. No tax is due until the gain is realized by the heirs.
2006-10-23 03:52:19 · answer #1 · answered by brenden b 2 · 0⤊ 0⤋
It depends on what the estate does. In most circumstances the estate will recognize the gain on a certain valuation date which if I recall correctly could be different then the date of death. This will allow you to get the shares with the FMV of the date of valuation. The only issue might be if the estate doesn't have enough cash to pay the taxes and some shares may need to be sold in order to pay the tax.
Check the IRS website www.irs.gov
You should also perform a search for estate taxes. You should also be able to find a book in the library or in a bookstore that may help you out.
Do not rely on the broker as state above, the brokers usually do not know the right answer. If there is an estate lawyer they should be able to give you the answer.
2006-10-21 16:13:42 · answer #2 · answered by BHWMST 3 · 0⤊ 3⤋
Go to IRS.GOV; upper right hand corner and look in the publications. I believe your wife's basis in said stock is the value thereof on the date of her father's passing; and her date of acquisition would be the same. Any brokerage house can provide the daily closing price of stock on a given date for you. Your wife would only pay on any gain at the time she sells the stock.
2006-10-23 03:51:29 · answer #3 · answered by acmeraven 7 · 0⤊ 0⤋
Your wife's tax basis will be the market price for the shares on the day of her father's demise. Should it be a weekend or legal holiday the previous date of NYSE closing. My sympathy to your wife and the family.
There is no code; the federal tax regulation will be found in Pub 17 or at
2006-10-21 15:29:36 · answer #4 · answered by fran t 2 · 0⤊ 0⤋
Michael has a couple of different quick Q&A's on inherited stock.
Short story, unless the estate is worth more than $1,500,000.00 there will be no estate taxes due.
Your wife will acquire the stock at its "stepped-up cost basis" resulting in her getting the stock at its current fair market value. Tax will only be payable when and if she sells the stock in the future for a profit.
http://www.michaelbeller.com/inherited-stock-faq.php.htm
2006-10-21 18:29:53 · answer #5 · answered by Anonymous · 0⤊ 1⤋
The broker can answer your questions....
2006-10-21 15:27:06 · answer #6 · answered by kitkatish1962 5 · 0⤊ 3⤋