Inheritance

My sister and I were contingent beneficiaries on my Dad's investment account. Mom was primary. Dad passed away in December 2020. Mom disavowed the account in the summer of 2021, and in January 2022, Dad's account was split between my sister and I. I understand my basis on the assets in the account date back to my Dad's death in December of 2020. My question is, do I have a 2021 tax liability on capital gains and dividends paid by mutual funds and ETF's in the account during 2021?

386

Expert Alumni

Jan 26, 2022 1:34:42 PM

You will have income tax on any capital gains or dividends earned in the account after the date of death, which for you is all of 2021 assuming the account was not owned by your mother after death and before she disavowed it. If nothing was sold from the account there is no sale to report.

You will have long term holding since that is automatic on inherited property. Please update if you have more questions.

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Inheritance