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BoomBoomJ
New Member

Capital Gains on Sale of INHERITED Stock ?

Isn't this supposed to be considered "Long Term" rather than "Short Term"?   And ultimately, what difference might it make? 

 

1 Best answer

Accepted Solutions
tagteam
Level 15

Capital Gains on Sale of INHERITED Stock ?


@BoomBoomJ wrote:

Isn't this supposed to be considered "Long Term" rather than "Short Term"?   And ultimately, what difference might it make? 


Yes, the holding period for property acquired from a decedent is long-term. 

 

The difference is short-term capital gains are taxed at the same rate as ordinary income while long-term capital gains get preferential (LTCG rate) treatment.

View solution in original post

9 Replies
tagteam
Level 15

Capital Gains on Sale of INHERITED Stock ?


@BoomBoomJ wrote:

Isn't this supposed to be considered "Long Term" rather than "Short Term"?   And ultimately, what difference might it make? 


Yes, the holding period for property acquired from a decedent is long-term. 

 

The difference is short-term capital gains are taxed at the same rate as ordinary income while long-term capital gains get preferential (LTCG rate) treatment.

View solution in original post

BoomBoomJ
New Member

Capital Gains on Sale of INHERITED Stock ?

Thank you so much TagTeam!   So it appears though that this one [1] transaction I have in TurboTax Deluxe is categorizing it as "Short Term" ??  How do I change (or make sure) that it is Long Term?

 

tagteam
Level 15

Capital Gains on Sale of INHERITED Stock ?


@BoomBoomJ wrote:

Thank you so much TagTeam!   So it appears though that this one [1] transaction I have in TurboTax Deluxe is categorizing it as "Short Term" ??  How do I change (or make sure) that it is Long Term?

 


@BoomBoomJ You need to indicate that the property (stock, fund, or whatever) was inherited); the program will then automatically classify the transaction as long-term.

BoomBoomJ
New Member

Capital Gains on Sale of INHERITED Stock ?

Thanks again TagTeam!    I may need to "upgrade" to TT Premier (??) as I did not see anywhere in TT Deluxe where that distinction (ie. that the stock was inherited ) could be made ....  Did I miss something?

Anonymous
Not applicable

Capital Gains on Sale of INHERITED Stock ?

in the date acquired box on the 8949 worksheet type in "inherited"  that will move it to long-term 

BoomBoomJ
New Member

Capital Gains on Sale of INHERITED Stock ?

AWESOME HackItOff !   That's exactly the  info that we needed!   Thanks so much!

DavidF2
New Member

Capital Gains on Sale of INHERITED Stock ?

I agree that inherited stock is considered a long term gain regardless of when it is sold.  Question... How do you enter inherited stock in TurboTax so it is considered a long term gain if it is sold 3 months from the date acquired?  Since I transfer multiple stock transactions (100+) from Merrill Lynch (ML) I hope to modify 30 which are inherited stocks sold 3 months from acquired date date.  How is this done?   Is it in the transfer information from ML?               

Mike9241
Level 6

Capital Gains on Sale of INHERITED Stock ?

in date acquired enter "inherited"

in theory, the cost basis should not be reported to the iRS

what you have to do really depends on how the broker reports it.

 

RayW7
Employee Tax Expert

Capital Gains on Sale of INHERITED Stock ?

Mike9241 is correct regarding his answer on entering 'Inherited'  in the date acquired field to indicate Long Term Gains from the sale of inherited stock.

 

You should review your 1099-B before importing and if necessary manually enter the transitions.

 

The tax rate for long-term gains is lower than the rate on short-term gains or your regular income tax rate.

 

Note: Regarding basis:

When you inherit stock or other property, your basis is usually the value of the asset on the date of death of the previous owner. Assuming the asset had appreciated since the original owner purchased it, the basis is "stepped up" to current market value, so the income tax on any profit that built up while the previous owner was alive is forgiven. You are responsible only for the tax on appreciation after you inherit the stock. If the stock price falls before you sell it, you can claim a tax loss. If the stock had lost value while owned by your benefactor, your basis is "stepped down" to the date of death value.

 

An exception applies only when an estate is large enough for a federal estate tax return to be filed. The exception can set the basis of inherited property at its value six months after the owner died, or when it was sold if during that six month period. Using this exception, called the alternate valuation date, may make sense if the value of the estate's assets has fallen during the six months following the owner's death. If the executor of the estate chooses to value assets using the alternate valuation date for estate tax purposes, the value on that date becomes your basis in the inherited stock.​​​​​​

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