Open TurboTax

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
Still need to file? Our experts can get your taxes done right. Get started >
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

cancel
Showing results for 
Search instead for 
Did you mean: 
j_lagler_20
New Member

A TOD occurred, now estate requests partial liquidation of stock $100k & pay back to estate. How is that recorded by individual that rec'd TOD? Gift?.. estate tax?

A TOD occurred $200k+, now estate requests partial liquidation of stock $100k & pay back to estate. How is that recorded by individual that rec'd TOD? Gift?.. estate tax? 

1 Best answer

Accepted Solutions
dmertz
Level 15

A TOD occurred, now estate requests partial liquidation of stock $100k & pay back to estate. How is that recorded by individual that rec'd TOD? Gift?.. estate tax?

I'm not sure that it's necessary that the $100k that needs to be returned to the estate for the purpose of satisfying the estate's debts be derived from the sale of the stock that transferred via TOD.  I suspect that the estate simply needs an amount of money back from each beneficiary in proportion to amount each beneficiary received as other than a pecuniary bequest.  Whether you choose to fund that $100k through a sale of the stock is probably your choice.

If you do sell stock to come up with the funds, as bwa said, your cost basis in the stock is the stepped-up value as of the date of death (or the alternate valuation date, if the estate elected to use the alternate valuation date).

The sale of the stock would be reportable on your tax return.  Gains relative to the stepped-up basis would be taxable to you as in any stock sale.  The $100k that you give back to the estate is not itself reportable anywhere.  However, if the estate is administered in a state that has an inheritance tax and you are subject to such tax, the amount returned to the estate would reduce the amount on which you are subject to inheritance tax (which is generally paid by the estate on your behalf).

View solution in original post

6 Replies
dmertz
Level 15

A TOD occurred, now estate requests partial liquidation of stock $100k & pay back to estate. How is that recorded by individual that rec'd TOD? Gift?.. estate tax?

I'm not sure that it's necessary that the $100k that needs to be returned to the estate for the purpose of satisfying the estate's debts be derived from the sale of the stock that transferred via TOD.  I suspect that the estate simply needs an amount of money back from each beneficiary in proportion to amount each beneficiary received as other than a pecuniary bequest.  Whether you choose to fund that $100k through a sale of the stock is probably your choice.

If you do sell stock to come up with the funds, as bwa said, your cost basis in the stock is the stepped-up value as of the date of death (or the alternate valuation date, if the estate elected to use the alternate valuation date).

The sale of the stock would be reportable on your tax return.  Gains relative to the stepped-up basis would be taxable to you as in any stock sale.  The $100k that you give back to the estate is not itself reportable anywhere.  However, if the estate is administered in a state that has an inheritance tax and you are subject to such tax, the amount returned to the estate would reduce the amount on which you are subject to inheritance tax (which is generally paid by the estate on your behalf).

bwa
Alumni
Alumni

A TOD occurred, now estate requests partial liquidation of stock $100k & pay back to estate. How is that recorded by individual that rec'd TOD? Gift?.. estate tax?

If you are referring to a Transfer on Death stock ownership, why is the Estate involved?  It usually goes directly to the named individual.

j_lagler_20
New Member

A TOD occurred, now estate requests partial liquidation of stock $100k & pay back to estate. How is that recorded by individual that rec'd TOD? Gift?.. estate tax?

TOD is going to individual(s)... but estate passed all $ to individuals.. so there is a request for each individual to liquidate a portion of TOD to pay estate tax bill.. so can that be construed as a gift back to estate..or how is sale/gains/ money back recorded ..when liquidated..on individual tax return.
bwa
Alumni
Alumni

A TOD occurred, now estate requests partial liquidation of stock $100k & pay back to estate. How is that recorded by individual that rec'd TOD? Gift?.. estate tax?

For the individual it would reduce the (nontaxable) inheritance.  It would not be a gift.  Rather, it could be accounted for as a increase in basis of the stock.
j_lagler_20
New Member

A TOD occurred, now estate requests partial liquidation of stock $100k & pay back to estate. How is that recorded by individual that rec'd TOD? Gift?.. estate tax?

Ok.. so that portion of the TOD, liquidated for the estate, would drive cost basis higher. what would be cost basis of the inheritance stock at time of TOD transfer? original purchase price or price at date of transfer? thanks .. your comments have helped.
TomYoung
Level 13

A TOD occurred, now estate requests partial liquidation of stock $100k & pay back to estate. How is that recorded by individual that rec'd TOD? Gift?.. estate tax?

It's not an increase in basis of the remaining stock.  You're going to deduct that basis when you report the sale, so you can't "double dip" and also get a higher basis in the remaining stock.
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
message box icon

Ready to start your taxes?

Hand off your taxes, get expert help, or do it yourself.

See Pricing
Manage cookies
v
ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrstuvwxyz0123456789-_~