Sell now or wait until early next year?

[Safari10]

Seeking some sage advice:

A few months ago my spouse inherited various holdings totaling about $150,000 in a brokerage account from a deceased relative. When I say various, there’s about 25 individual stocks, stock funds and bond income funds. A couple of the holdings proved worthless, but there’s also some solid stocks such as AT&T and some respectable stock and bond funds.

All of these holdings have been transferred to our brokerage account at Vanguard, where we intend to put them into a Vanguard fund, perhaps the lifetime strategy fund for moderate growth.

My fundamental question is: Does it make any difference when we liquidate these inherited holdings and invest the proceeds from their sale into the Vanguard fund? The question arises considering the end of the year is coming up.

The inheritance is nice to have but not essential to our financial health. We are longtime Vanguard customers invested only in Vanguard stock and bond funds. We don’t buy individual stocks and bonds.

Thank you for considering my question.

[rob]

My understanding is the step up basis is date of death... so changes from then are on you - up or down. I would junk the lot and reinvest.

[pizzy]

What is the tax impact?

Would waiting until 2024 save on taxes due to lower income or other situations?

If it's market performance related, no one knows.

[stan1]

Are these in a taxable account or in IRA accounts?

If taxable your cost basis should be adjusted and reflected in your Vanguard account, and you should be able to see it online.

That would guide you on how to strategize your 2023 and 2024 taxes. But I absolutely would sell these stocks and buy what you intend to hold long term. There is zero reason you should stick with the securities your wife's deceased relative chose to buy.

[GMCZ71]

Seeking some sage advice:

totaling about $150,000 in a brokerage account from a deceased relative.

All of these holdings have been transferred to our brokerage account at Vanguard, where we intend to put them into a Vanguard fund, perhaps the lifetime strategy fund for moderate growth.

Thank you for considering my question.

It sounds like this a taxable account. Those funds will add income in taxable. Your other threads talk about Roth conversions and being 71 with rmds coming soon, so I would lean more to equity index in taxable and readjust in tax def.

[livesoft]

I would attach zero sentimental value to these inherited holdings and would have sold them as soon as I received them. As previously noted, they should have received a step-up basis at some point and should have little unrealized capital gains if not losses.

Don't forget that quarterly dividends may be paid soon, so try to sell before then. Of course, anything that you all purchase will probably pay dividends, too, unless you get tricky and buy the new shares after the ex-dividend date(s).

Bottom line: I would not wait.

[KingRiggs]

If these are in a taxable account and the date of death (step up in basis) is such that there won't be a big capital gains hit, I'd sell the lot and buy what you desire.

[Safari10]

Thank you all for your helpful advice -- which generally tells me what I thought would be fine, which is just sell this stuff and reinvest the proceeds as we wish.

Yes, this is a taxable account. Whatever gains these funds have made since they were inherited in June should not be particularly high (although the stock certainly has surged in the past few weeks) and therefore should not have a major impact on our overall tax situation.

Again: Thank you.

[cheese_breath]

When I was much younger and unschooled in investing principles I had company stock supplementing my income until my seccond pension kicked in at age 60. About this time of year I faced a similar question. I knew I'd need to sell more to supplement next year's income, but I already had enough cash to get me into January. I decided to wait until next year to sell, and the stock took a big hit in the meantime. It cost me more waiting to sell next year than the taxes would have been if I'd sold earlier.

I'm not saying that will happen to your stock (nobody knows this), but I'm amazed by the number of people who seem to blithely ignore this possibility whe recommending one wait to sell his stocks.

[tibbitts]

Thank you all for your helpful advice -- which generally tells me what I thought would be fine, which is just sell this stuff and reinvest the proceeds as we wish.

Yes, this is a taxable account. Whatever gains these funds have made since they were inherited in June should not be particularly high (although the stock certainly has surged in the past few weeks) and therefore should not have a major impact on our overall tax situation.

Again: Thank you.

Well... $1 can matter when it comes to cliffs, so you really want to make sure you don't trigger falling off one needlessly.