Sale of inherited stock

[joe3431]

I sold some inherited stock last year and the 1099-b shows the wrong basis.  I selected "the cost basis on my statement is incorrect" and entered the corrected cost basis.  However, there is nowhere I can find to indicate that this was inherited stock.  Other postings have indicated an inherited stock check box.  Where is it?

[HelenC12]

As you enter your 1099-B form manually, on the Now, we'll enter one sale on your XXX 1099-B screen, enter the requested information and in the How did you receive this investment? box, select I inherited it.

The cost basis of inherited stock is generally the market price of the stock on the date that the benefactor died.

• In rare cases, the executor of the estate will make a special election to treat the stock differently. Check with the executor to be sure.

[joe3431]

My sale was already loaded with my 1099-b.  There is no way to get to the screen you showed when I edit the sale.

[joe3431]

Actually, there is no way to get to the screen you showed at all.  Are you sure this works in Turbotax 2020 Premier?

[HelenC12]

I used TurboTax Online Premier for the screen shot.

The fact that your stock was inherited does not get reported to the IRS. A stock sale is a stock sale to them. The reason TurboTax has the inherited stock question is so that additional interview questions are generated to help you calculate the cost basis. 

[joe3431]

I appreciate your efforts, but so far you have only told me things I already know.  I was looking for somewhere to indicate this one sale is of inherited stock.

[AnnetteB6]

As long as you have reported the correct basis for the stock sale, it is not necessary to indicate that it was inherited.  

That information is only used within TurboTax to be sure that the correct basis is entered.

@joe3431

[joe3431]

Well, as usual, I figured it out myself.  In case anyone else runs into this, this is how it's done (remember, this is for the desktop version of Turbotax Premier):

- Click on the "Wages and Income" Tab

- Scroll down to Investment Income

- Click Update to the right of "Stocks, Mutual Funds, Other

- Edit the investment account (1099-B) containing the sale entry

- Click continue on change account number screen
- Scroll down to the sale of the inherited stock and click edit to the right of it

- Where it says Box 1b Date Acquired, simply overtype the erroneous date with the word "Inherited"

This does not require an override, Turbotax will allow you to simply enter Inherited into the date box!

[joe3431]

Also, don't forget to check "The cost basis on my statement is incorrect".  This will open a field where you can enter the inherited basis of the stock on the decedent's date of death.  This option is under the "Select any less common adjustments that apply" page a few pages after you override the date acquired field.

[sj_13]

Just verifying, in addition to entering the word 'inherited' for date, I also changed the cost basis to the value on the actual date of death.  On the subsequent screen, I also re-entered the same amount.  Nowhere does it ask to have the actual date used.    There is just an assumption on the part of TurboTax and the IRS that the amount I entered is correct for a date they know nothing about?  I have tons of these to enter because I did an import and even partial shares are listed  (they must be re-invested dividends).

[joe3431]

I am assuming you changed it on line 1e, where it was reported on your 1099-b.  I left this alone, since a few screens later you check the box that the cost basis on my statement is incorrect, opening up a box where you enter the corrected amount.  There is nowhere to enter the date it was inherited.  You addressed that issue when you entered inherited in the date acquired field (1b).  They don't care what date it was inherited (or originally acquired, for that matter) once you flag it as inherited.

[fanfare]

Inherited stock is always treated as Long Term.

If you inherited the stock less than a year before you sold it, this becomes important.

That's the only reason to mark it "inherited".

Otherwise, you will get the treatment Long Term anyway based on your holding it more than one year.

In any case you want to enter the correct basis.

[fanfare]

Your shares from reinvested dividends are not inherited.

[steve l d]

One way of looking up the value on the day of death  FMV

go to MarketWatch (free version)  and select the ? at the top, enter the symbol and continue until you have pulled up the page for the stock.

Scroll down until you see a series of tabs.  Select "Historical Quotes"

Enter the date as start and end -- or a small range.

[KimEWaters]

So glad I found this feed. I couldn’t figure out why I owed so much and then remembered I only would owe from when my mom passed on 1/18/22 until 5/4/22 when I sold her stocks and invested the money in mutual funds. The “Stocks” app on my iPhone helped me find the price of all 4 stocks the day she passed. I was having a hard time otherwise finding them for that exact date. I will plug this all in tomorrow and thankful I don’t have to hire a tax person for 4 stupid stocks! I’m sure the government would have been glad to take several hundreds more from me!