Stock held in two names cost basis question

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
cliff
Posts: 64
Joined: Sun Mar 04, 2007 3:21 pm

Stock held in two names cost basis question

Post by cliff » Tue Aug 14, 2012 4:45 pm

My father has stock which is listed in both his and my name – it is listed as father "or"son for ownership purposes.

I assume that either he or I could sell it while he is alive????I assume that then we would need to pay whatever the price minus cost basis is in terms of taxes???

If the stock is sold after he is deceased would it be a stepped up cost basis or would the full cost basis still apply to the transaction?

Since it is listed as co-owners – "or"– I am assuming the full cost basis would apply?

Any input would be appreciated.

JDCPAEsq
Posts: 1835
Joined: Mon Mar 05, 2007 3:58 pm
Location: Southwest Florida

Re: Stock held in two names cost basis question

Post by JDCPAEsq » Tue Aug 14, 2012 4:51 pm

I assume your father paid for the stock and put it in joint name with you. Therefore, at his death there would be a full step up in the basis of the stock. If you predeceased him, there would be no stepup.
John

cliff
Posts: 64
Joined: Sun Mar 04, 2007 3:21 pm

Re: Stock held in two names cost basis question

Post by cliff » Tue Aug 14, 2012 7:36 pm

Thank you. Yes, he did pay for the stock. If I understand you correctly, if after his death I were to cash in the stock the cost basis is calculated from his death. If the stock were sold prior to his death and sold by me under my social security number,I would need to pay taxes on the full cost basis. Correct?

xerty24
Posts: 4827
Joined: Tue May 15, 2007 3:43 pm

Re: Stock held in two names cost basis question

Post by xerty24 » Tue Aug 14, 2012 7:56 pm

cliff wrote:Thank you. Yes, he did pay for the stock. If I understand you correctly, if after his death I were to cash in the stock the cost basis is calculated from his death. If the stock were sold prior to his death and sold by me under my social security number,I would need to pay taxes on the full cost basis. Correct?

If he paid for it, it's his for tax purposes unless he deliberately gifts it to you. If he sells while he's alive, it's his tax issue.
No excuses, no regrets.

JDCPAEsq
Posts: 1835
Joined: Mon Mar 05, 2007 3:58 pm
Location: Southwest Florida

Re: Stock held in two names cost basis question

Post by JDCPAEsq » Tue Aug 14, 2012 7:58 pm

cliff wrote:Thank you. Yes, he did pay for the stock. If I understand you correctly, if after his death I were to cash in the stock the cost basis is calculated from his death. If the stock were sold prior to his death and sold by me under my social security number,I would need to pay taxes on the full cost basis. Correct?

Yes, if sold after his death there would be a new basis based on fair market value at date of death. Selling it prior to death it should appropriately be taxed to him, even if sold in an account of yours.
John

cliff
Posts: 64
Joined: Sun Mar 04, 2007 3:21 pm

Re: Stock held in two names cost basis question

Post by cliff » Tue Aug 14, 2012 8:48 pm

Thank you...much appreciated

Post Reply