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Lev
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I sold my share of stock last year in a business that I inheirited

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I sold my share of stock last year in a business that I inheirited in 2005. The value of the business in 2005 for my part was figured to be about 150,000 and I sold it for 130,000 in 2008. My question is this, the value of the business was figured as if someone were to come in and want to buy it but I received a stock basis form that has the figure of 35,000 on it. Does that mean the IRS considers the value of my stock to only be that amount even though the business would have sold for much more and can I just put 150,000 as the basis on my return and disregard the amount on the stock basis form?
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

If you inherited the business - your basis is a fair market value of the business at the time the decedent died. That is so-called stepped-up basis.

If I understood you correctly the FMV was determined back in 2005 as $150,000

 

The basis reported is most likely a book basis that the company is required to keep track of.

You will report the sale of your share on the schedule D and should use $150,000 - that will give you $20,000 capital loss.

I suggest to attach a note to your return with information to the IRS that the share was inherited and how did you determine the share basis.

 

Your capital losses will offset any other capital gains, but if you have net capital loss - your deduction against your other income is limited by $3000 in the current year with the rest to be carried over to the next year.

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22990
Experience: Taxes, Immigration, Labor Relations
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Lev
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