Tax Law (Questions About Taxes)/Bequeathment

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Question
Dear Mr. Stancil,

When our mother passed away in 2012, she left to my brother and myself a sum of money invested in a DWS mutual fund. When she was living,we were all three listed as joint tenants in common. and we used the dividends from the mutual fund to augment her social security. Upon her passing, my brother agreed that we would re-register the account as joint tenants but giving my social security number so that I could draw the monthly dividends until we decided to sell. I have been doing just that until we noticed the fund price begin to go south a few months ago and the dividend shrinking. We both agreed to liquidate the fund. I asked shareholder services to split it equally and send each of us a check for half.  However, they said that they couldn't do that - they could only send the full amount to the address of the soccial security number on record, which was me. After it arrived in my account, I cut a check for half of it to my brother.  I don't want to pay taxes on the full amount, so my brother checked with his CPA who said that there will be a place on my tax return for me to say that half the amount will be claimed on another person's tax return.  First question:  Is this correct and, if so, where is it on my return and what are the particulars for properly doing it?  Second question: Aside from the dividends that I collected since May of 2012 which I know how to handle, how is the principal that was left to us, and that we split evenly, taxed - as a straight bequeathment or do we, in some way, have to determine how much it has grown in value since original purchase? (The purchase was originally made with mom's money when we were young tykes, not ours - and we have no record of the original purchase price unless the mutual fund does)  Many thanks for your help!  ------ James

Answer
James,

Thanks for your question.

On Form 8949, just show your brother's half as a negative amount on a separate line, and call it co-owner's share.

Your basis in the fund is the fair market value as of date of death.  Profit or loss is determined based on excess of deficiency from that amount.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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