Your basis in the stock is probably not the amount your parent paid for it. Normally such stock receives a basis step up at the owner's death. This explains the questions TurboTax is asking. If for some reason the stock did not receive a basis step-up, then you can select the gift option.
If you inherit property from a decedent who died before 2010, or one who died after 2009 and whose estate was not elected to be exempt from estate tax, the basis of the property is usually the fair market value (FMV) on the date of death. However, if the executor of the estate chose an "alternate valuation date" of six months after the date of death, your basis is the FMV on the alternate valuation date. This is referred to as a "step-up" in basis since the value of the property is typically higher on the date of death than when acquired by the decedent.
If you inherit property inherited from a decedent who died after 2009 and whose estate was elected to be exempt from estate tax, in general your basis is the lesser of the FMV as of date of death, or the decedent's adjusted basis in this property. Note: In some cases, the estate executor may have increased the decedent's adjusted basis of property before its distribution; if so, consult the information provided by the executor to determine the basis for gain or loss.
In any case, the executor or administrator of the decedent's estate should be able to tell you your tax basis for the property. This will usually be the amount that was reported on the decedent's estate or inheritance tax return, if one was filed, or will be the amount the estate or trust paid for the property.
The same is also true for property held in a trust created by the decedent or the decedent's estate. The fiduciary of the trust should be able to tell you the basis, based on the estate/inheritance return.
