topic I sold mutual funds that are a mix of inherited and purchase. How do I report the gains/loss? Does it matter? in Investors & landlords

I sold mutual funds that are a mix of inherited and purchase. How do I report the gains/loss? Does it matter?

dejjs — Sun, 14 Mar 2021 17:33:04 GMT

Re: I sold mutual funds that are a mix of inherited and purchase. How do I report the gains/loss?...

DianeW777 — Sun, 14 Mar 2021 18:05:44 GMT

It does matter for two reasons. First the holding period for inherited property sales is always long term; and the cost basis is the FMV on the date of death for the portion of the inherited funds.

In order for TurboTax to know the stock is inherited we want to be sure you have all the right selections when you enter these investment sales. The cost will be the same as the selling price if the sale occurred close to the time you inherited because inherited value on the date of death becomes the cost basis for you. Inherited investment assets are always considered held long term.

Sign into your TurboTax account, then follow the steps below.

Select Wages & Income > Scroll to Stocks, Mutual Funds, Bonds, Other > Review
Select Edit beside the inherited stock or select Add more sales
Continue to Review your (description of inherited stock) sales > click the pencil to edit this stock sale
Now you can follow the screen image provided with the additional details next:
- When we get to this screen shown above, be sure to select at the top > Long term basis not reported to IRS,
- Select the check box beside The cost basis is incorrect or missing on my 1099-B
On the next screen you can choose None of these apply > Select I don't want to make any changes to my cost basis right now
You can choose to get a call from an expert if it pops up, otherwise you can say No thank you
Continue through the rest of the screens.

This should correct any issues and allow you to eliminate the errors.

For the mutual funds that you purchased and then sold, you will enter them as an investment sale that you purchased.

Re: I sold mutual funds that are a mix of inherited and purchase. How do I report the gains/loss?...

dejjs — Sun, 14 Mar 2021 19:42:30 GMT

Hi @DianeW777 Diane, thanks very much for your help. Your instructions are very clear.

My problem is that I cannot differentiate on the 1099B which shares were inherited and which purchased. The Fund shows all have holding periods that are long-term (which they all are; date of death was early 2016 and I sold all in 2020) and used average cost (ACST) to compute the basis. I had multiple sales/redemptions in 2020, two of which list a date acquired; the rest are all blank. The dates acquired are around the time that the inherited funds actually hit my account but I haven't looked that up. The two dates (or one of them) also may be re-invested earnings.

All of my redemptions are shown as being sold for a loss from the basis cost.

Any additional thoughts based on this additional information? Thank you!

Re: I sold mutual funds that are a mix of inherited and purchase. How do I report the gains/loss?...

DianeW777 — Sun, 14 Mar 2021 19:57:21 GMT

The goal would be to reduce gain and thereby reduce the tax liability. In your situation, it doesn't appear as though there will be a big difference and would likely still result in an overall loss.

And it appears they are all held long term except possibly the reinvested dividends that were sold as well. Those fund dates must be separated out from the long term sales, if applicable.