When I retired in 2006, I used the NUA option to transfer my company stock from my 401k and ESOP to my brokerage account at BigGreen investments.
I received a 1099-R for the transaction and paid the tax due.
We are residents of Arizona, a Community Property State.
As such, the non IRA assets of EACH spouse receives a step-up (or down) to market value as of the date of death of the first spouse.
My wife died in early July 2023.
The NUA amount does not receive a step-up. The increase in value above the NUA does receive a step-up which I did.
I need to establish the cost basis of the value above the NUA after the step-up.
For simplicity:
The 1099-R shows a NUA amount of $200,000.
The shares have increased in value and were worth $500,000 on her date of death.
Question:
I believe the cost basis above the NUA after the step-up is $500,000 - $200,000 = $300,000.
Am I correct???
Thanks in advance.
Any flaws in my logic??
