How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask RD Your Own Question

RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
510454
Type Your Tax Question Here...
RD is online now
A new question is answered every 9 seconds

I was the beneficiary of a trust set up by my grandmother.

Resolved Question:

I was the beneficiary of a trust set up by my grandmother. My father was trustee. He has now passed, and I've inherited the securities in the trust. Is the cost basis of the securities in trust / inheritance (a) ‘carried over' or (b) ‘stepped up/down'.
Submitted: 7 years ago.
Category: Tax
Expert:  RD replied 7 years ago.

If you were the beneficiary of the trust set up by your grandmother on her death than you inherited the interest on her death and the basis for the stock will be the fair market value of the stock as of the date of her death. Your father was only the trustee and you did not inherit the assets from him.

If the trust was formed when your grandmother was alive and it was an irrevocable trust than you would have a carryover basis from her.

 

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases.

Customer: replied 7 years ago.
Reply to Renu V's Post: To be clear, I inherited the stock when my father passed a few months ago. My grandmother set this up whe she was alive, and died many years ago. So would it be the fair market value on the date of his death, or the carry over basis of when the stock was purchased in trust ?

Many Thanks for this help,
-AndyM
Expert:  RD replied 7 years ago.

What kind of trust was set up? Did she retain any interest in the trust?

Customer: replied 7 years ago.
Reply to Renu V's Post: She did not retain interest in the Trust. It was irrevocable. My Father and I recieved income off the trust (from dividends), and then when he died, I recieved the stock.
Customer: replied 7 years ago.
a bit more information...it was a testamentary trust. When she (my grandmother) died, her estate was put into equal trusts for each of her grandchildren.
Expert:  RD replied 7 years ago.

If it is a testamentary trust than it was created by a will after your grandmother's demise and hence was included in your grandmother's taxable estate. Hence your basis in the stock will be the step up basis as of the date of death of your grandmother.

 

 

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases.

 

 

Customer: replied 7 years ago.
Reply to Renu V's Post: Yes, it was created by a will. I need just one more clarifying question so I'm clear. The tax implication / difference is huge. I do appreciate your help / patience.
So stock was purchased and put into trust for me upon her death (1960). The will was setup such that I didn't recieve ownership of the stock until my father died(happened last august). I now want to sell the stock. For the cost basis, do I use (a) the price of the shares when I took ownership in august(stepped up basis)or (b) the price of the shares from the 1960 purchase (carry over basis)?
Many Thanks,
-AndyM
Expert:  RD replied 7 years ago.

You will take the cost basis as the fair market value of the stocks on the date of your grandmother's death.

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases.

Customer: replied 7 years ago.
Thanks...and if some additional shares were purchased along the way (ie. 1964, 1973, etc.) I use the cost basis from then?
Expert:  RD replied 7 years ago.

Yes, you will use the cost basis based on your purchase cost for additional purchases.

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases.

RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
RD and other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
 
 
 
Chat Now With A Tax Professional
RD
RD
Tax Professional
8784 Satisfied Customers
CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..