CPA says I can take capital loss on inherited munis and don't need to amortize

Discussion in 'US Taxes' started by jay, Jul 7, 2005.

  1. jay

    jay Guest

    I inherited some tax-exempt muni bonds. They were above par at the date of
    death. Two of the bonds were recently called, and the amount redeemed was
    less than Fair Market Value at Date of Death.

    My brother asked the CPA who did the tax return for the estate about this,
    and the CPA says that my Cost Basis is simply the FMV at the Date of Death.
    The CPA says that I do not need to amortize inherited bonds...and says that
    only bonds that were *purchased* need to be amortized. This means I can
    take a Capital Loss on the bonds that are held to maturity (or called) as
    long as the amount redeemed is less than the FMV at Date of Death.

    Is what I am told really true? If so, then why don't I have to amortize
    down inherited muni this because the estate already paid estate
    tax on the full FMV?

    If you believe what I'm being told is false, then let me know why you
    believe this.


    jay, Jul 7, 2005
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