4 ms·

After you die your estate sells stocks

• matthewdgreen 4y ago
  Does the estate pay capital gains on those stocks, or can it take advantage of stepped-up cost basis rules to avoid those as well?
  • ti00 4y ago
    I'm not an expert, but my reading of the IRS's FAQ [1] is that the cost basis of inherited assets gets reset to the fair market value of the assets on the date of death. 1. https://www.irs.gov/faqs/interest-dividends-other-types-of-income/gifts-inheritances/gifts-inheritances https://www.irs.gov/faqs/interest-dividends-other-types-of-i...
    • WalterBright 4y ago
      You're right, and then you pay the inheritance tax which is more than the capital gains taxes would have been.
      • dragonwriter 4y ago
        > > And then you pay the 40% federal inheritance tax and the 20% state inheritance tax on the total value at the date of death. After the $12 million (nearly $13 million next year) exemption, the unused portion of which passes to the surviving spouse and increases their tax-free estate exemption. But, yes, in the limit case estates aren't the tax-optimal way to transfer capital to survivors, which is why other vehicles are used for people for whom the estate exemption is small potatoes.
        • WalterBright 4y ago
          If you're a billionaire, a $12m exemption isn't much of anything.
          • dragonwriter 4y ago
            “But, yes, in the limit case estates aren't the tax-optimal way to transfer capital to survivors, which is why other vehicles are used for people for whom the estate exemption is small potatoes.”
            • WalterBright 4y ago
              Like what?
              • kasey_junk 4y ago
                GRAT’s are common for volatile assets like tech shares.
  • WalterBright 4y ago
    The estate gets a stepped up cost basis on the date of death. And then you pay the 40% federal inheritance tax and the 20% state inheritance tax on the total value at the date of death.