Tax Law (Questions About Taxes)/selling stocks

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Question
Hello: 7 yrs. ago myself and my brother inherited shares of stock when our Mom passed away. She inherited them from my Grandfather who pased away 5 years earlier. My brother cashed his in but I have held onto mine. What I want to know is I was thinking of cashing in some of them around 600 shares. I would like to know how I figure out how much taxes I will pay on the shares I cash in? Thanks Mike

Answer

Dear Mike,

I am sorry for your loss, below is the answer to your question.


First we have to determine the nature of the gain or loss that you will sustain when you will sell the stocks.

1-In general a taxpayer who inherits property is considered to have held the property longer than one year, regardless of how long the taxpayer actually held it. That means you will have a long term capital gain or long term capital loss.

Second we need to determine the amount of the gain or loss. A taxpayer's original basis in property inherited from a decedent is generally:

(1) the FMV of the property at the date of the decedent's death;

(2) the FMV on the alternate valuation date (see ¶224,720), if the fiduciary of the estate elects to use alternate valuation;

If you did not do any probate for your mother estate, you would fall under the first category. You would find the price of the stock at the date of your mother's death and that would be your basis. If their was an estate for your mother then the estate executor would be able to help you.

I hope this answers your question, for further discussion and comments please reply to: itaniabe@aol.com

Regards,
Abraham Itani, CPA
www.itaniatx.com

PS please, do not forget to score my answer.

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ABRAHAM ITANI, CPA

Expertise

TAX QUESTIONS DOMESTIC AND INTERNATIONAL OUTBOUND AND INBOUND. FBAR COMPLIANCE. CORPORATE, PERSONAL, PARTNERSHIP, PASS TROUGH ENTITIES, S-CORPORATION, LLC, TRUST, GIFT TAX, 1120, 1040, LATE FILING, NON FILING, AMT, FTC.

Experience

MORE THAN 10 YEARS OF STATE AUDIT TAXATION, MORE THAN 10 YEARS OF PRIVATE AND PUBLIC TAX EXPERIENCE WITH ITANI ACCOUNTING AND TAX, KPMG AND MNP. DEALING WITH HIGH NET WEALTH INDIVIDUALS, LARGE PARTNERSHIPS, EXPAT., CFC AND PFIC. DEALING WITH TAXING AUTHORITY ON ISSUES OF NON FILINGS AND LATE FILINGS.

Organizations
MEMBER OF AICPA, AND NJSCPA.

Education/Credentials
CERTIFIED PUBLIC ACCOUNTANT IN NEW JERSEY AND COLORADO.

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