Liquidating inherited stocks

Posted by / 19-Mar-2018 14:38

Liquidating inherited stocks

When this happens, the stock ownership can go directly to the beneficiary according to the estate planning documents that the individual prepared.When the beneficiary takes possession of the stock, they can decide to hang on to it and let it keep growing in value.Remember, your basis is reported at the fair market value on the date of death, so this should hopefully help minimize any tax gain you might have.Cost basis is the original value of an asset (generally the purchase price), plus any commission, adjusted for stock splits, dividends and capital distributions.If you are lucky enough to receive inherited stock, not only will you receive the shares, but you will also get a nice tax break from the government.Taxes on inherited stock work differently than taxes on traditional stock sales.

Instead of finding the original basis price, the IRS allows you to step up the basis price to the price of the stock on the day that the original owner died.

Stock cost basis 10Current value 50Stock held in irrevocable trust which needs to be terminated and sitributions made because of death Is it better to sell stock in trust and pay taxes or transfer in-kind to beneficiaries and have them pay taxes whenever they sell?

Usually for a simple inheritance the basis of the asset is stepped up to the fair market value on the date of death of the decedent.

This number should be much easier to obtain and it gives you a nice tax break.

If the price of the stock increased substantially over the course of the last 20 years, you do not have to worry about the taxes on that increase.

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Here are the basics of inherited stock and how the taxes work.

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