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Replies: 7
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Orange Blooded [3442]
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Estate Income Tax Question for an Expert
Mar 22, 2024, 8:39 PM
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Would like to know what date is used to determine whether gains and losses for securities
sold from an estate account are short term or long term. The securities were sold and proceeds deposited to an estate checking account, then distributed to heirs. Tried to search the question, but didn't get anything specific to this situation other than securities transferred/distributed directly to heirs are deemed to be held as long term. However, my question is a bit different since there was no direct transfer of the securities. Not sure if the date used is the original purchase date by the decedent or the date of death. Would've posted this to the Business/Investing board, but looks like it hasn't been active for months.
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Hall of Famer [21271]
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I think its based on purchase date.
1
Mar 22, 2024, 8:49 PM
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Less than 1 year, short term, more than 1 year, longterm
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Orange Blooded [3442]
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Re: I think its based on purchase date.
Mar 22, 2024, 10:30 PM
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My thinking was the original purchase date. Since securities in an estate are valued at the DOD or at an "alternative valuation date", six months after DOD, thought that date may affect the period to determine short term or long term holding.
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Freshman [3]
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Re: Estate Income Tax Question for an Expert
4
Mar 22, 2024, 8:52 PM
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CFP. Here. The cost basis is the basis at the date of death. Genarally that means there is a step up of basis at death. Ie. if the decedents bought the security at $10 a share and at death the secururty was valued at $20 a share the new basis is $ 20 a share. Once the securities are in the estate account the new basis is $ 20. If it appreciates and you sell at $22 a share you have either a long or shirt term gain of $2 a share or if it goes down you either have a shirt term or long term loss depending on how long it was held in the estate account. One caveat is if the securities were in a bypass irrevocable trust there may not be a step up in basis .
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Orange Blooded [3442]
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Re: Estate Income Tax Question for an Expert
Mar 22, 2024, 10:39 PM
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Thanks for the response.
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Asst Coach [701]
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Re: Estate Income Tax Question for an Expert
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Mar 22, 2024, 8:55 PM
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My understanding is that inherited property, real estate, equities, or otherwise is transferred to heirs at fair market value (FMV) at date of death, i.e., "stepped up basis". So if the original basis (cost) was 1,000 but the value at death was 1,500, the heir's new basis is 1,500. LT or ST would probably be the time from death until the heir sells.
Disclaimer: I'm NOT a CPA or attorney. Peace, Out
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Orange Blooded [3442]
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Re: Estate Income Tax Question for an Expert
Mar 22, 2024, 10:40 PM
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Thanks for the response.
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All-TigerNet [11004]
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