Discussion:Basis of Inherited Stock
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Taxmaster70 (talk|edits) said: | 2 April 2007 |
| Taxpayer's uncle passed away in 1984. Taxpayer inherited the stock, but cousin remained the income beneficiary. Stock remained in trust while cousin lived. Cousin passed away in 1995. Trust finally gave taxpayer the stock after some litigation in 1999.
What date do we use for date of death value i.e. stepped-up basis of stock? Anyone with any thoughts here? I have a few but would appreciate some input. | |
| 2 April 2007 | |
| 1984 (you can probably add the cost of litigation allocated among all assets received) | |
Taxmaster70 (talk|edits) said: | 2 April 2007 |
| That was what I was leaning towards, but I had gotten other comments regarding his ability to "enjoy the fruits of the asset" which would not have occurred until later. My feeling was that the trust would have received the stepped up basis and that this basis would flow through to the taxpayer when he received the asset. | |
| 2 April 2007 | |
| I have an associated question -
What if the tp received the trust before the donor died? Does he then inherit the donor's basis? | |
| 3 April 2007 | |
| Depends on whether the donor had the right to income while he was alive. | |
| 3 April 2007 | |
| He didn't mean that. Basis transfers regardless of retained rights. Different things happen when donor dies. | |
| 3 April 2007 | |
| I have both cases. Two siblings. They came into the rights to the trust at the age of 25. The donor was still alive when the older one turned 25, but had died before the younger one turned 25.
So is it correct that the basis for the older one is the donor's basis, and the basis for the younger one is the value at the date of death? | |
| 20 April 2007 | |
| Wwtaxes's question is very inreresting and I look forward to the reply. I have a similar question.
What about trusts where donor grants income/assets before death but full rights to the trust at a certain age (presumably after death)? What would the beneficiary's cost basis be based on? Original purchase price? Value on formation of trust/granting of income? Value on death of donor? Value on reciept of full rights? Is this dependent upon whether the trust was initially revocable or irrevocable? I really appreciate your help. | |
| 20 April 2007 | |
| Dennis, I did mean that. A gift with a retained life estate gets a step up in basis. Basis does not carry over. | |
Www.cpa1.biz (talk|edits) said: | 13 October 2007 |
| I have a question regarding stepped up basis.
If wife receives stock from decease husband, she would get the step up basis. She then gives the stock to her child and the child sells the stock. Does the child keep the same step up basis from the date of death of the deceased husband? | |
Death&Taxes (talk|edits) said: | 13 October 2007 |
| Depends if the stock was in only the husband's name or in joint names. | |
Www.cpa1.biz (talk|edits) said: | 14 October 2007 |
| D&T,
Can you give me the scenarios, where it wouldnt based on your answer. 1) If it was in only husband's name. 2) If it was a joint. I am guessing if it was in joint, only half of the shares or possibly none would take the step up basis. Can you please explain? | |
| 14 October 2007 | |
| wwwCPA, you might want to start your education by reading the IRS pub on basis Pub 551 and Internal Revenue Code:Sec. 1014. Basis of property acquired from a decedent. Then I'd suggest that you get some CPE on the subject. | |
Www.cpa1.biz (talk|edits) said: | 14 October 2007 |
| I am readint it now.
Thx Kevin. | |
| 14 October 2007 | |
| Discussion:Step Up Basis in stocks | |
