https://ttlc.intuit.com/replies/5393231

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Re: https://ttlc.intuit.com/replies/5393231

Does the cost basis for a common stock reset upon death of an individual and transfer of that stock to their estate?

My real situation is:

- Trust sold common stock in 2024 to a bank holding company.  Per the bank (in writing), it was not obligated to report the transaction because it was private, tender offer transaction where each shareholder had a choice to sell or not sell shares.  It was an outright acquisition of the bank.  No Federal reporting was submitted under the Trust EIN.   Therefore, no tax return document except for a normal 1099-DIV 

Question 1:   Does Trust follow the Bank's position??  i.e. ; no reporting to IRS by the bank, therefore, no reporting by the Trust?  (Distribution to beneficiaries was done.)

Background:

Pertinent dates below.  If your direction is to report the sale, did the value reset in 1994 or 2011??

-Common Stock recorded purchase date in 1982; but NO purchase price recorded.

- Asset transferred to Revocable Trust in 1994 & was trading at 60% of year-end book value 

-Trust changed to Irrevocable in 2011 upon death of original Grantor; book value question in process.

 

 

 

You must first determine your basis in the property. 

• The basis of property inherited from a decedent is generally one of the following:
  • The fair market value (FMV) of the property on the date of the decedent's death 
  • The FMV of the property on the alternate valuation date, but only if the executor of the estate files an estate tax return (Form 706) and elects to use the alternate valuation on that return. See the Instructions for Form 706.

Is money received from the sale of inherited property considered taxable income?

Thanks for your reply.  This is a little different.  While my parents were living, they placed all their assets in a Family Revocable Trust.  So, when each of them died, yes .. I did final tax returns for each as individuals.  The Trust became Irrevocable when Mom passed away in 2011.  I became a Co-Trustee in 2004.  A tax identification # was created for the Trust in 2011. I prepare tax returns annually.

 

Common stock was one of the Trust assets .  The only listing of this asset has been an annual dividend.  No FMV has been reported thusfar.  I have asked the Bank to research the 2011 FMV.  When (if) I get the info, I've read that Schedule D should be used.  Agree??

 

 

You don't have to worry about Cost Basis until you sell the stock and receive a 1099-B.  When you get that info, save it until you do sell, then you can use that Cost Basis to report the sale (which will be reported on Form 8949, and Schedule D).

 

In the TurboTax interview for a Stock Sale, if the Cost Basis on the 1099-B is missing or incorrect, check the box indicating that and on the next page, enter the correct Cost Basis.  You can look up historical stock prices for most stocks on Big Charts, if you know the stock symbol. 

 

It sounds like now all you're reporting is the income from a 1099-DIV.

 

@ritaburd