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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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MY FATHER DIED 6 MONTHS AGO..LEAVING MY MOTHER WITH NO RETIREMENT FUNDS.WE SOLD THER HOUSE WHICH GAVE HER A NICE NEST EGG TO LIVE ON.HOWEVER SHE HAS BEEN DIAGNOSED WITH CANCER AND WANTS TO GIFT HER DAUGHTERS AND GRANDCHILDREN BEFORE SHE DIES SO THAT SHE MAY SEE THEM ENJOY HER GIFTS INSTEAD OF WATCHING THE JOY FROM HEAVEN. CAN THIS BE DONE? AND WHAT ARE ADVANTAGES AND DISADVANTAGES FOR ALL?
Submitted: 11 years ago.
Category: Tax
Customer: replied 11 years ago.
Reply to Jon Andrews's Post: JON...HER ESTATE IS CASH.......200,000.....AND 30,00 IN I BONDS.WITH HER SOCIAL SECURITY SHE MAY SPEND 5,000 A YEAR FROM HER NEST EGG FOR A COMFORTABLE LIFE.SHE WOULD LIKE TO GIFT TO HER 4 DAUGHTERS AND 4 GRANDCHILDREN.IN THE EVENT THAT SHE NEEDS ANY SUPPORT HER FAMILY WILL TAKE CARE OF HER.I DONT HAVE A CLUE ABOUT YOUR ADVICE ON THE "STEP UP IN BASIS".WHAT EXACTLY DOES THAT MEAN? THANK YOU
Expert:  Jon Andrews replied 11 years ago.

Step up in basis would be, for example, if she owned Microsoft stock that she had originally paid $1.00 per share for and now they were worth $60.00 per share, then if they were inherited the beneficiaries would have a basis of $60.00 per share but if they were gifted, the beneficiaries would have a basis of $1.00 per share.


If the estate is cash, there is no need to be concerned with the step up issue. The bonds should probably be converted to cash prior to gifting. If the sale results in a capital loss she will get to claim that loss. If it results in a gain, her tax rate appears to be low enough that whe would have little if any tax on the gain.


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Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience: I deal with all levels of tax planning and controversy - from the ordinary to the complex.
Jon Andrews and other Tax Specialists are ready to help you
Customer: replied 11 years ago.
Reply to Jon Andrews's Post: My husband is Canadian.....in the process of getting his green card...My mother wants to gift him 11,000 as well as me (her daughter).I want to know the pro's and con's of this transaction.
thank you

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