Upon my retirement in 2006 I utilized the NUA option to transfer the shares of my company stock from my 401k to a taxable brokerage account.
I received an IRS Form 1099-R showing the gross distribution (box 1), the taxable amount (box 2a) and the net unrealized appreciation (box 6). I paid the tax on the taxable amount.
We live in Arizona. Arizona is a Community Property State.
As residents of Arizona - upon the death of one of the spouses the cost basis for assets of both spouses are stepped up to the value on the date of death.
My wife passed away earlier this year (2023).
I requested that the cost basis for the stocks in our brokerage accounts be stepped up to the values as her date of death.
The cost basis for each stock was stepped up without difficulty. However, the cost basis for the shares in my NUA was also stepped up.
I believe the NUA rules state that the NUA is not eligible for a step up.
Am I correct?
Do I need to do anything? If so what action is recommended?
Thanks in advance.
