Dividends in an Estate

[kww]

My parent died 12 years ago, and I just discovered they had 300 hundred shares of stock held by a third-party stock transfer agent.  The stock has paid some dividends but the amount in total would be less than $1,000 over the entire period. How do I record this payment? Would I record it the year I received it, or would I be required to refile 12 years of returns? It is my assumption based on what I found that income tax was withheld by the company in my parent's name but yet to confirm that.

I assume the stock basis would be at the time of death based on step up. The original basis for my parents would have been much higher than the value at death.

[tagteam · Accepted solution]

You might want to seek professional guidance in your locality.

https://taxexperts.naea.org/listing/service/estates-gifts-trusts

Regardless, in the typical scenario, the shares would be stepped up to their fair market value as of the date of death. Further, the dividends can, most likely, be reported as income in respect of a decedent (IRD) at this point.

https://www.irs.gov/publications/p559#en_US_2021_publink100099582

Doing so would simply involve reporting the dividends as such on your individual income tax return (Form 1040).

[Opus 17]

Once you establish ownership of the stock and sell it, your cost basis is the share price on the day your most recent parent passed, and you will pay long term capital gains on the difference.  

I defer to my colleague on the treatment of the accumulated dividends, but I don’t think you need to report tiny amounts on 12 years worth of amended returns, if you just discovered the money this year.  

[kww]

I appreciate the input. That is what I was hoping for as I doubt I have details going back that far. 

[kww]

Thank you for the reply and info.