Question in regard to INHERITED stock - no IRA or no 401K - strictly stock investments

[taxesohmy2017]

My mom passed away back on October 21, 2023 and I am the only beneficiary on her investment stock account.   I have a few questions:

1. I want to rollover the entire stock portfolio into my account - Rollovers are NOT taxable income correct?

2. I will be possibly taxed on gains when I go to sell the stock whether it be in 2023 or 2024 etc correct?

3. I have read about step-up in basis, so my NEW purchase price would be step-up in basis on the date of my mothers passing correct?

4.  I have 3 other siblings and since I am the only one mom listed as beneficiary, I agreed to split with my siblings. Since I am the beneficiary, can I rollover my inherited portion to them without any tax implications or would I have to sell their portions can pay taxes the possible gains on my personal 1040 tax return?

5. When I say possible gain above, it is because I don't know where things stand at this point if gains, washes or losses will be determined. This just happened and I am working on things slowly so no mistakes are made.

6. Now, I have read that inherited stocks are losses can be deducted but I am getting confused. I found this paragraph it states the following:

"By the same token, of course, people who inherit stock cannot claim any losses that occur before the original owner's death. Unfortunately, even if the value of stock plunges on the day of the deceased person's death, the heirs won't be able to use those losses to offset gains from their other investments"

From what I interpreted, I can only claim losses on the sale after the date of death. So my mom passed away on Oct 21, 2023.  So if the stock showed a loss on Oct 21, 2023 I won't be able to claim the loss but if the loss occurred on Oct 22, 2023 then I take the loss because it was AFTER her date of death, is that correct OR am I completely wrong?

As of right now, nothing has been done, it's sitting her investment portfolio. 

Thank you in advance for your assistance.

[Rick19744 · Accepted solution]

Some comments regarding your situation and questions:

• Since you inherited the stock, your cost basis is the FMV on the date of death (the average of the high and low for the day) or the alternate valuation if that is used.  
• This is the step-up you are referring to.  These are also the values that would be used if an estate tax return is filed.
• You will need to contact the broker holding the stock to get it transferred into your name.
• You are correct in that there is no gain or loss on any of the stock until such time as you actually sell the stock.  Any gain or loss is based on your stepped-up basis figure in that stock.
• Since you were the only beneficiary, the only way to get any of the stock to your siblings is for you to personally gift the stock.  There will be no tax implications (assuming the value is below the limit) at the time of gifting, but there could be some gift tax return filing requirements for you.  
• You will need to take this one step at a time.

[taxesohmy2017]

Thank you, Rick.

I will absolutely take my time on this.

Thanks for your input, I greatly appreciate it.

Take care!

[rjs]

"From what I interpreted, I can only claim losses on the sale after the date of death. . . ."

As Rick19744 said, there is no gain or loss until you actually sell the stock. Changes in market value are only "paper" or "unrealized" gain or loss. They have no effect on your tax. When you sell the stock, your gain or loss is simply the difference between what you sell it for and your basis, which is usually the fair market value (FMV) on the date of your mother's death. It has nothing to do with any previous market fluctuations.

If you transfer shares of stock "in kind" to your siblings, there are no income tax considerations, but you might have to file gift tax returns (Form 709). If you sell the stock and give your siblings cash, then you have to report the sale on your own income tax return, and you might have a gain or a loss. The gift tax considerations also still apply to the cash gifts, based on the dollar amounts. You cannot file a gift tax return with TurboTax.

Just a bit of semantics: Everybody uses the term "stepped up basis," but your basis is the FMV on the date of your mother's death (or on the alternate valuation date). It could be stepped up or stepped down, depending on what your mother paid for the stock.