Basis from selling (formerly joint) assets

Discussion in 'Tax' started by Bob K., Jul 26, 2005.

  1. Bob K.

    Bob K. Guest

    What is the basis of assets (stocks) in the following situation.

    -- Husband and wife buy stocks in a joint account.
    -- Stocks in joint account are transferred to separate
    individual accounts for both spouses. Individual
    accounts are set up as "transfer on death" accounts
    with primary beneficiary being spouse.
    -- Husband dies and wife inherits stocks as beneficiary.
    She then sells the stocks.
    -- What is the wife's basis for calculating her capital gain?

    I have read (on this forum) that the transfer from joint to
    individual accounts would be considered a "gift", so that
    the basis of the stocks transferred would retain essentially
    the same basis as in the joint account. However, in the
    above case, the spouse would be inheriting stocks and would
    normally calculate gains based on FMV on the entire amount
    of the inherited stock.

    Bob K.

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2005) - All rights reserved. >>
    << ======================================================= >>
     
    Bob K., Jul 26, 2005
    #1
    1. Advertisements

  2. Bob K.

    Herb Smith Guest

    Bob K. wrote:

    > What is the basis of assets (stocks) in the following situation.
    >
    > -- Husband and wife buy stocks in a joint account.
    > -- Stocks in joint account are transferred to separate
    > individual accounts for both spouses. Individual
    > accounts are set up as "transfer on death" accounts
    > with primary beneficiary being spouse.
    > -- Husband dies and wife inherits stocks as beneficiary.
    > She then sells the stocks.
    > -- What is the wife's basis for calculating her capital gain?


    In most states, it does not matter whether the stocks are
    held jointly or in individual accounts. Only the stock
    shares in the spouse's name would receive a "stepped up"
    basis adjustment, or in the case of a joint account, only
    1/2 the stock shares.

    In certain states ("Community property states") the
    spouse/beneficiary receives a 100% step up in basis as of
    the date of death, but only on the stock shares in joint or
    decedents name. Those shares which had been transferred to
    surviving spousess name (pre-death) would receive no step up
    in basis.

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2005) - All rights reserved. >>
    << ======================================================= >>
     
    Herb Smith, Jul 27, 2005
    #2
    1. Advertisements

Want to reply to this thread or ask your own question?

It takes just 2 minutes to sign up (and it's free!). Just click the sign up button to choose a username and then you can ask your own questions on the forum.
Similar Threads
  1. bpowder66
    Replies:
    9
    Views:
    2,852
    Gene E. Utterback, EA
    Sep 10, 2003
  2. Replies:
    4
    Views:
    451
    Benjamin Yazersky CPA
    Dec 11, 2006
  3. Replies:
    0
    Views:
    236
  4. HW \Skip\ Weldon

    Formerly tax-free

    HW \Skip\ Weldon, Nov 27, 2003, in forum: Financial Planning
    Replies:
    6
    Views:
    181
    Ed Zollars, CPA
    Nov 28, 2003
  5. Mark Freeland
    Replies:
    0
    Views:
    260
    Mark Freeland
    Feb 9, 2009
Loading...

Share This Page