Selling Inherited Stock

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muhtar1938
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Joined: Sat Sep 25, 2010 12:53 pm

Selling Inherited Stock

Post by muhtar1938 » Mon Feb 14, 2011 2:32 pm

Dear Group:

I inherited J. C. Penny stock over a decade ago and have decided to sell it. I seem to recall that inherited stock is treated differently than stock that one bought with one's own money in terms of deciding the cost basis for tax purposes. Can someone tell me how to handle such a sale come 2011 tax time, so I can pass it along to my accountant.

Thanks, as always,
Muhtar

arlubarsky
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Joined: Mon Feb 14, 2011 2:49 pm

Post by arlubarsky » Mon Feb 14, 2011 2:56 pm

The cost basis is the closing price on the day the person died. You may add whatever it cost you to get it moved to your account, if anything. The special rules for inherited stock apply only to the first year or so, when you are allowed to treat it as a long term gain when selling (hopefully it had gone up!) regardless of when the deceased actually purchased it. After a decade, this won't be of any consequence to your situation. Al

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stoub
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Joined: Thu Jan 27, 2011 6:58 pm

Post by stoub » Mon Feb 14, 2011 3:28 pm

arlubarsky wrote:The cost basis is the closing price on the day the person died.
It's the average of the high and low price on the day of death.

kaneohe
Posts: 4957
Joined: Mon Sep 22, 2008 12:38 pm

Post by kaneohe » Mon Feb 14, 2011 3:55 pm

arlubarsky wrote: The special rules for inherited stock apply only to the first year or so, when you are allowed to treat it as a long term gain when selling (hopefully it had gone up!) regardless of when the deceased actually purchased it. After a decade, this won't be of any consequence to your situation. Al


I'm not sure what you are saying here. The basis stepup applies regardless of the holding period, right?.......so that part applies forever?

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