My wife owned stocks in a non-public company. Her stocks have now been retitled to my name. I cashed one and hold a second one. I need to discuss how to handle in TT

[jbus48]

I'm reading about Schedule B and Schedule E.  I don't think they apply, but not certain. 

I also have a question about the 2 houses we jointly owned.  Both have been retitled to my name.  I assume these don't get reported since total values are within the limit of $5 million, but want to verify.  And do I get an appraisal for value at time of death and does this get reported?

[TomYoung · Accepted solution]

I take it that you inherited these items due to the death of your wife?

The stocks would receive a "stepped up" basis at the DoD.  Being a non-public company makes it more difficult to determine this basis so you might see if the company itself can provide some guidance, which they may or may not do.  Assuming the sale of the stock happened "fairly close" to the DoD, (quotation marks used as that's a judgement call on your part), you would probably be safe making the basis the same as what you sold that one share for, with no resulting gain or loss.  You use the "Stocks, Mutual Funds, Bonds, Other" interview, telling TurboTax that no 1099-B was received, (assumed - if you did get a 1099-B then tell TurboTax that).  If you follow the "no 1099-B" interview path tell TurboTax you "inherited" the stock, (it will ask how you acquired the stock), or if you follow the "1099-B received" interview put the word "inherited" in the "Date acquired" field.  That will make the holding "long term" irrespective of how long you or your wife actually owned the stock.

The jointly owned houses would also get a "stepped up" basis.  Typically if you live in a "community property" state the whole house gets the stepped up basis, otherwise only half of the house's value gets that step up.  Getting an appraisal for both houses wouldn't be a bad idea, but if you happen to know a friendly local Realtor simply getting some "comp values" for the houses would probably suffice.  There's no reporting in the income tax return of the ACT of inheriting; you simply make notes in your own records of the basis.

Schedule B reports Dividends and Interest income so unless that non-public stock actually pays a dividend that Schedule is irrelevant here.

Schedule E reports rental income and expenses so if you're renting out one of the two houses you will need to include that in your income tax return.

The " limit of $5 million" refers to the need to file a Form 709, ("death tax), return.  It appears that's not necessary here but you might want to file a Form 709 anyway if you want to make the portability election which allows you to use your wife's unused exclusion amount, doubling the exclusion to $10+ million.

You have enough on your plate here that this might be a time to opt for some local "professional" help here, like a small CPA shop.

Tom Young