If I sell a stock that I inherited is the taxable basis 100% of the sell $ or do I only pay on gains>?

Question

For capital gains purposes, do I use the inherited cost as the basis for figuring capital gains or since it is an inheritance is the entire sale taxable?

Answer 1

Wayne's correct. When you acquire stock through an inheritance, your basis in the stock is the value of the stock on the date of the decedent's death. You can use almost any online stock site to look up what the value was. Yahoo! even has one. Just go to finance.yahoo.com.

Your gain or loss is the sale price less your basis. The gain/loss is what you are taxed on, and it will be considered long-term.

Hope this helps!

Answer 2

The basis is the FMV (Fair Market Value) on the date of death of any property that is inherited with the exception of property that was acquired with pre-tax dollars. In the case of stock the only way that I can think of would be if the stock was held in a 401k or IRA. With that exception you sell the stock and treat it as long term gain regardless of the time that you or the deceased held it. The basis would be the FMV on the date of death.

Answer 3

The basis is the fair market value on the date of death. You would pay taxes on the difference between the sale price and the basis. Also, regardless of how long you held the stock, any gain (or loss) would be considered long term.

Answer 4

Also depends on how the inheritance was structured legally. Based upon your question I'm guessing that this pertains to a simple inheritance without any legal structure. In this case the death tax and capital gains tax are your two biggest concerns.

Answer 5

If it's inherited, the estate should have paid tax (if any was due) up to the date of the death of the person you inherited it from - your basis would be the value as of the date of that person's death.

If it had been received as a gift, then your basis would be that of the giver.