If I received an inheritance in stock from a trust...
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danielpelc
New Member

If I received an inheritance in stock from a trust, the cost basis determined by: a) Cost of stock at purchase prior to receiving it b) Stock value on day of transfer

I received stock in-kind through a trust in Sept 2020, however my 1099-B shows the cost basis as when the stock was purchased in 2015, before I got it. I read that cost basis on inherited stock should be based on the stock value at time of inheritance disbursement. Which is correct?
4 Replies
Carl
Level 15

If I received an inheritance in stock from a trust, the cost basis determined by: a) Cost of stock at purchase prior to receiving it b) Stock value on day of transfer

Neither is correct. Your cost basis is the FMV of the stock on the day the person you inherited it from, passed away. Typically, you use the day's closing price.

 

tagteam
Level 15

If I received an inheritance in stock from a trust, the cost basis determined by: a) Cost of stock at purchase prior to receiving it b) Stock value on day of transfer

@danielpelc 

 

You take the average of the high and low that the stock traded for on the date of death. 

 

Example: If the high for the day was $25 and low for the day was $24, your basis would be $24.50.

 

If the decedent (the person from whom you inherited the stock) died on a weekend, you would average the high and low for both Friday and Monday and then average those two prices.

danielpelc
New Member

If I received an inheritance in stock from a trust, the cost basis determined by: a) Cost of stock at purchase prior to receiving it b) Stock value on day of transfer

My grandmother never owned the stock sold. She put cash into a trust for us. The trustee had the cash invested in stocks after her death. She died in 2008, stock was invested in 2015, sold in 2020. So it wasn't stock given by grandma but rather stock distributed in-kind. How does that affect it?

 

tagteam
Level 15

If I received an inheritance in stock from a trust, the cost basis determined by: a) Cost of stock at purchase prior to receiving it b) Stock value on day of transfer


@danielpelc wrote:

She died in 2008, stock was invested in 2015, sold in 2020. So it wasn't stock given by grandma but rather stock distributed in-kind. How does that affect it?


Then you would take the trust's basis in the stock (i.e., the price the trust paid for the stock).

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