How do I pay taxes for a stock sale of a deceased person? He died in 2002. The sale was in 2021.

[ketz905173]

The shares were in book form.  I didn't know about them until I received the check.  Even though the stocks were in his name, am I the owner since I'm his heir?  How do I report the sale when it is not my social security number?

[LeonardS]

Yes, you are the owner as you are the heir.  Could you please clarify did you receive any tax forms reporting the sale in addition to receiving the check?  Was the check a large amount?

[ketz905173]

Thanks for your attention.   I got a 1099-B, sent to the deceased.   The check was for $24,703.07.  

[LeonardS]

You should contact the financial institution that issued the 1099-B and provide them with your information designating you as the heir and request that they reissue Form 1099-B and a new check using your social security number.  You may also inquire as to the basis of the stock if it is not shown on the 1099-B as you will need this information when you file your tax return.

[jtax]

Getting the 1099-B reissued in your SSN would be the easiest way to deal.

You should not have been able to deposit a check made you to someone else. However sometimes the banks don't actually check, specially if the last names are the same. Technically you would contact the holder of the asset with a death certificate and some indication that you were the heir (e.g. probate certificate, small estate affidavit, or whatever they will accept) and then they would re-issue in your name and SSN.

You have to report the income on your 1040 even if the 1099 is wrong (or even if it was never issued).

The IRS might never come after the decadent. Even though the 1099 will go through the matching program there should be no other income so long after death. After the standard deduction they should be in the zero-percent capital gain bracket (even using $0 basis). So the IRS won't likely come after them because no tax would be due. If they do just give the IRS the death certificate and show how you declared it on your 1040. Minor hassle of writing a letter and I doubt that would actually happen given the amount you stated.

Your basis might not matter if you don't have much income (that 0% bracket). However it might matter. The basis of assets inherited from a decedent is usually "stepped up" the fair-market value on the day they die. For a mutual fund this is the closing. For a stock this the average of the high and low for the day. Many websites will give you historical value.
But if any shares are from dividend-reinvestment that is a separate calculation.

[ketz905173]

This was great advice.  I called the company and they told me that I had to transfer the account to my name first.  This is unlikely to happen before April 18, since there are several steps.  I have to wait two weeks just to get a letter from them showing the value of the stock, which is needed for a medallion signature

   I was hoping that I could declare the 1099-B on my tax return, because it will be mine eventually.  I am afraid that if I wait to do an amended return, there will be a penalty for late payment.  It usually takes the IRS a while to find a mistake, and by that time, I'd have the 1099-B.

[ketz905173]

Thank you.  I am greatful for all the good sense replies.  I am amazed at all the people taking the trouble to give advice.  I now have a blueprint for what to do.

   Cost basis of old stuff is always a problem.  I don't know how anyone ever figures out the cost basis for dividends that have been reinvested for years.  I have a mutual fund that I bought over 50 years ago.  I've added money over the years as well as reinvested all the dividends.  Unless I am willing to pick a cost basis out of a hat, I can never sell it.  I think it will be my estate's problem.

[jtax]

---

   I was hoping that I could declare the 1099-B on my tax return, because it will be mine eventually.  I am afraid that if I wait to do an amended return, there will be a penalty for late payment.  It usually takes the IRS a while to find a mistake, and by that time, I'd have the 1099-B.

---

You could file for an extension and then have until Oct 15th to get the 1099 issued correctly.

Yes, that is not an extension to pay, so estimate the gain (you know what the 1099 will say) and pay it. 

[jtax]

---

   Cost basis of old stuff is always a problem.  I don't know how anyone ever figures out the cost basis for dividends that have been reinvested for years.  I have a mutual fund that I bought over 50 years ago.  I've added money over the years as well as reinvested all the dividends.  Unless I am willing to pick a cost basis out of a hat, I can never sell it.  I think it will be my estate's problem.

---

Post 2011 the brokers/transfer agents are required to keep all of that information.

Pre 2011 my suggestion is to look at whatever old statements you have or can get. They frequently have your basis. Or if you still have your old tax files frequently the 1099's have an additional statement showing the annual invested/reinvested amounts. If you don't have records back that far it is a problem.  You can sell and use a zero basis. That isn't as bad as it sounds. In many cases folks are in the zero-percent capital gains bracket (or can plan to be) so there may actually not be any tax.   Or perhaps you could estimate the basis and rely on the https://www.law.cornell.edu/wex/cohan_rule ... no one likes to do that but it's not wacky. (Consult with a profession before doing so.)

Under current (long-standing) law, your estate won't have a problem. Basis is stepped up (or down) to the fair-market value on the day you die. So the estate/heirs can sell immediately at little but knowable gain. https://www.law.cornell.edu/uscode/text/26/1014