I Sold inherited stock! How do I calculate my basis?

Amir · #1 (**permalink**) 01-26-2007, 01:35 PM

I sold inherited stock in 2006 and it seems that I cannot get a good answer on how to calculate the gain or loss on sale of this stock.

I received the stock in 2003 when the value of the stock at time it was inherited was 15,000.

When I sold the stock, it was worth $32,000.

What is my reportable gain?

TaxGuru · #2 (**permalink**) 01-28-2007, 11:53 AM

Since you inherited the stock in 2003 and assuming the Estate Adminstrator elected to use the valuation date that calculated the basis of your stock at $15,000, this effectively becomes your basis for tax purposes.

IRS has special rules for assigning valuation for inherited property. In fact, for you despite your basis is $0 dollars, you get a stepped up basis, to $15,000 and save paying taxes on $15,000 of capital gain.

Amir, you are one of the lucky taxpayers that the IRS has given a tax break for your situation. Your reportable gain is therefore $17,000 of long term gains!!