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Incorrect acquisition date reported on 1099-B for asset sold after step up in basis due to death

My spouse died in 2023. Since we are in CA, a community property state, the broker (Vanguard) correctly revalued the basis of all securities to date of death. However they also changed the acquisition date to date of death, while keeping the correct long term / short term gain categories. On the 1099-B , sales after the date of death with long term gains were reported in the correct long term gain category. However with a reported 2023 acquisition date, it looks as if they were held for less than a year. This didn’t bother TurboTax. Will the IRS system flag it? If so anything I can do about it? I don’t think I can get Vanguard to change their system.

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4 Replies
KrisD15
Employee Tax Expert

Incorrect acquisition date reported on 1099-B for asset sold after step up in basis due to death

As long as you indicated that it was inherited, the gain will be Long-Term. 

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Incorrect acquisition date reported on 1099-B for asset sold after step up in basis due to death

Thanks for the reply. The 1099-B doesn’t indicate the stock was inherited and I didn’t see a way to indicate that in TurboTax. I suppose if the IRS questions it, I can explain it then. 

Incorrect acquisition date reported on 1099-B for asset sold after step up in basis due to death

I did some further research and it seems that in the acquisition date column I should replace the date my wife died with the word INHERITED. That seems to be what it says in the instructions to form 8949 and in the following post:

https://ttlc.intuit.com/community/taxes/discussion/for-the-date-acquired-field-of-the-form-8949-do-y...

Do you agree? Thanks for your help.

 

ThomasM125
Employee Tax Expert

Incorrect acquisition date reported on 1099-B for asset sold after step up in basis due to death

When you report the investment as being inherited, it will be reflected as such on Form 8949, copy two:

 

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