Accepted Answer

Hello again prb,

There is no inheritance tax at the state level and there is no inheritance tax in the state of Michigan. Instead of inheritance tax, the IRS imposes an estate tax,but that only applies on estates that exceed a certain value.

You said your mother passed away on 10/29/2009, but that is today, so I assume maybe you meant 2008? If she died in 2008, estates valued at $2 million or less were not subject to estate tax. Tht level raised to $3.5 million in 2009. So if your mother's entire estate was below these values, then no estate tax would be due.

On the property that you received through inheritance, both the stocks and the home, you are entitled to a stepped up basis in those assets. What that means is that whatever the fair market value was of the stocks and of the home on the day your mother died now becomes your basis in those assets. You owe no tax unless you now sell those assets for more than the basis. So normally when you sell property shortly after it was inherited, you have no taxable gain to report, as your selling price is likely going to be the same as the fair market value when your mother passed away.

If when your mother died the home was valued at $900,00, then $900,000 is your basis. If you now sell the home for that amount or less, you have no gain from the sale and you will owe no tax. The same will apply to the stocks. If she owned 100 shares of ABC Company that were valued at $10 per share when she died, if you later sell those stocks for $10 per share, you have no gain and no tax to pay.

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Thank you prb

Expert:	Merlo
Pos. Feedback:	99.8 %
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Answered:	10/29/2009

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25+ years tax consulting. Specializing in returns for US citizens living abroad