Tax on inherited investments

USA Discussion in 'Individuals' started by Mark_S, Aug 10, 2017.

  1. Mark_S

    Mark_S

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    I am inheriting shares in a mutual fund. The gain since they were purchased by my deceased parent is significant I have the option to have the current brokerage liquidate the shares and provide me with the cash, or transfer me the shares as they are. Is my cost basis for tax purposes the same in either case, meaning the date of my parent's death? Or might taking cash cause my cost basis the date upon which my parent acquired the shares? Will appreciate advice on this.
     
    Mark_S, Aug 10, 2017
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  2. Mark_S

    Drmdcpa VIP Member

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    Basis is fair market value on date if death in most circumstances.
     
    Drmdcpa, Aug 10, 2017
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  3. Mark_S

    Mark_S

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    Thank you. I have just learned that there will be a "K-1" associated with this transaction. Apparently the assets are part of a trust from a grandparent, and therefore not part of my parent's estate. Is this an exceptional circumstance in which the cost basis is the date of purchase, and is there a difference in this case between me asking for shares or asking for cash?
     
    Mark_S, Aug 11, 2017
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  4. Mark_S

    Drmdcpa VIP Member

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    It sounds like you are in the rare circumstance where basis is not equal to fair market value on date of death. That is the assets are trapped in an irrevocable trust and not part of the decendent's estate.

    Insuch cases basis is determined by when the assets entered the irrevocable trust or date of death of the grantor, often the same date.

    In any case it should not matter whether you take stock or cash. The K-1 should distribute to you any taxable income.
     
    Drmdcpa, Aug 11, 2017
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