I received 1099-B for the sale of my deceased mothers sales of stock. But don't know what to enter as the cost basis. There's nothing about it on form. ?

[Rachel_W · Accepted solution]

First, I would like to express my condolences on the passing of your mother.

Your cost basis in the stock you inherited from your Mother is the value of the stock on her date of death.  

You can find the price per share of the stock on the date of her death by going here: Historical Stock Values.  You can research what the price per share of the stock was on that day and then multiply it by the number of shares you sold.  This will be your cost basis.

[jjklh]

Hello,

I am seeking additional information about the question related to sales of stock for a deceased relative.  When my mother passed last February, as the executor, I had to sell her stock to distribute to siblings.  She had 2 brokerages and each required that I set up my own brokerage accounts. I then had to close my mothers accounts and transfer funds to me.  Then I sold the stock and closed the accounts.

My mother did not receive any 1099's but I did.  I'm just wondering how I account for all these transactions?  And will I be taxed on the monies I received?

[VictoriaD75]

If you were the sole beneficiary of the brokerage accounts, and the new accounts were set up only in your name, you will have to report the earnings from the sale of the brokerage assets on your individual return. If you transferred the money to siblings, this is a gift transaction. Gift tax may apply if the amount was greater than $15,000.

If the brokerage was set up through an estate, then the estate would be responsible for the taxes and reporting. The transactions would not appear on your individual income tax return.

[jjklh]

Thank you so much!

[Bin1b4]

Isn’t ac1099 B is still valid for the time period that the person who may have sold shares when alive. So if they received a gain and 1099 DIV  shows 1a and 1b which is reported on final 1040 is taxed from individual . So how does the cash from that sale get tracked. 

[DianeW777 · Accepted solution]

The sale is what is tracked by the IRS.  If you are referring to the purchase price of the stock, you will have to do some research if you know purchase dates. 

The sale of stock is taxed on the decedent's return for the amount of shares sold before the date of death.  Any stock inherited and sold after death would be reported on the tax return of the beneficiary.  Likewise dividends are reported the same way.

For the original owner of the stock for sales before death:

1. Report the sale of stock with the actual cost the decedent paid for the stock and of course the sales price is listed on the 1099-B with the date of sale.  You can search for historical stock prices if you know the approximate dates of purchase of the stock.
   • You can use 'Various' as the acquired date if you are not sure.
   • Also, the holding period is important to obtain the best tax advantage  (one year or less = short term/more than one year = long term).
2. Report any dividends received before death on the final tax return of the decedent.

For the beneficiary after the date of death of the decedent:

1. Report any sale of stock after death on the beneficiaries return.  The cost for the beneficiary is the value of the stock on the date of death of the original owner.  The sales price will be listed on the 1099-B. Again you can use 'Various' as the date acquired and use the sales date listed on the 1099-B.
2. Report any dividends received after the date of death of the original owner on the beneficiaries return.

Please update if you have additional questions and one of our tax experts will help.

@Bin1b4