AboutMike Wellman Expertise I was a former Manager with Price Waterhouse, now PricewaterhouseCoopers, the largest accounting firm in the world. I have had clients in almost every industry and of every size.
I will only answer questions dealing with IRS problems such as delinquent tax returns, Offers in Compromise (Tax Settlement), IRS collection matters including installment agreements, liens, levies, seizures, audits, appeals, innocent spouse claims and injured spouse claims. All other will be referred to the question pool.
Experience Over 25 years experience in taxation specializing in IRS collections, examinations and appeals.
Publications New York Times, Wall Street Journal, Your Money.
Education/Credentials BBA, Baylor University.
Awards and Honors IRSOS.com won the Knowledgeweb award for educational excellence for content.
Expert: Mike Wellman Date: 2/6/2008 Subject: estate taxes vs. income taxes
Question Among other assets my mother left me several stocks. (The total amount of the estate will be over the tax threshold, so I will owe estate tax.) I sold these stocks for $95,000. According to the brokerage company the mean value of these stocks at the time of my mother's death was $106,000, the low value was $103,000, and the high value was $110,000. They have said that I can choose any of these values as the cost basis. For income tax purposes I would want to choose the highest amount and for estate tax purposes I would want to choose the lowest amount. Once I choose an amount does it apply to both estate tax and income tax or can I choose a different amount for each?
Answer There is only one value for both. The value is the market value at the date of death or precisely six months later. The only thing I can figure out they could be referring to is stocks that do not have a readily determinable market value because they are closely held, in which case you need to compare the estate tax rate to the capital gains rate if you held them longer than a year. Otherwise compare the estate tax rate to your marginal tax rate. Choose the one that benefits you the most.
