@Unwired17
So sorry for your loss.
Suppose a family member bought $10,000 worth of stock 50 years ago and you inherit it. When they died the stock was worth $50,000 and since then has appreciated further and is now worth $65,000.
Under current tax law your cost basis on these inherited shares would have "stepped up" from $10,000 to $50,000 because that was their fair market value on the date the person died.
Now the dividends were earned post death. The estate should have received a separate Form 1099 should show the interest and dividends earned after the date of the decedent’s death and paid to the estate
or other recipient that must include those amounts on its return. The dividend income is reported on a tax return of the estate but no tax is paid by the estate on them. A deduction is permitted on the estate’s tax return for distributions to beneficiaries. This includes completed distributions as well as those required but actually paid in a future year. The estate is therefore not taxed on dividends that it distributes to beneficiaries. Instead, the beneficiaries report their respective shares of distributed dividends.
The decedent received amounts as a nominee, the estate then should have given the beneficiaries /the actual owner a Form 1099, unless the owner is the decedent's spouse. you should have reported the dividend income on your own return.
Was a final estate tax return ever prepared?
So only date of death was cost basis, the dividend reinvested shares if you never reported the income their cost basis is 0 or what income you reported on them.
The costs of the final tax return and estate dealings should be born by the estate. If you incurred expenses managing the estate, you can deduct those on the estate's tax return. These might include costs like attorney or accountant fees or the cost to use a service. The estate can also deduct any executor fees it paid you for the services you provided as personal representative of the estate.
I hope this was helpful.
**I don't work for TT. Just trying to help. All the best.
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