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Tax Law (Questions About Taxes)/Cost-Basis for an "Unpriced" Security


Hello John Stancil, thank you for fielding my question.

I fully realize that in the capacity of the internet arena, you cannot provide individual tax advice. But so I can be prepared, I am asking some general questions for what I can expect when I consult a tax preparer early next year :)

My dad, between the years of 2006 and 2009, invested in an unpriced REIT which was not listed on any public exchange, and once bought into could not be sold. Basically, he paid $11 per share for each unit, and received monthly dividends off the investment. He passed away over two years ago, leaving my mother as the sole beneficiary of his estate. Since that time, the REIT has since went public and is now listed on a public stock exchange. However, since this event, the REIT has never realized the original per-share price my dad paid for it. Recently, my mom had need to sell some of the shares for expenses.

My question relates to cost-basis for income tax reporting purposes. My mom feels (and I concur) that the recent sale would constitute a tax loss, seeing as she sold the shares for less than what my dad paid for them. We also feel that since my dad passed away over two years ago, this would constitute a long-term investment as opposed to a short-term investment. However, our opinions may not necessarily correlate with what the IRS or the State of New Jersey may have in their tax codes.

Therefore, I am asking you whether our opinions are correct. Would this constitute a tax-loss on a long-term investment? Also, would cost-basis for this investment be established on the account statement for the month in which my dad passed away?

Thank you for any advice you may offer us here.


Thanks for your question.

The cost basis for the shares is their fair market value as of date of death. In the absence nice of an objective value such as daily stock market quotes, an alternative measure may be used - such as an appraisal or informed opinion by those familiar with the asset. In the e end of a publicly-traded security, the average of the high and low prices on the date of death would be the piece. The sale would be reported on Schedule D.

All inherited assets are considered long term.

Hope this helps.

John Stancil, CPA  

Tax Law (Questions About Taxes)

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John Stancil, CPA


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 I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


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.

FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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.

DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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