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Jax Tax
Jax Tax, Tax Attorney
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Experience:  JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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My Father-in Law passed away in his home state of Wisconsin

Resolved Question:

My Father-in Law passed away in his home state of Wisconsin last August and her brothers are working on settling the estate now. The estate includes stock and real estate. Most of it is in some sort of trust but they found some stock that was not in the trust and want to just send a check to her for $2500 and suggested that she might want to put it in an IRA to avoid or minimize taxes. We are both over 65 and living in Nebraska. Should we be concerned about taxes on this small amount and what will be our tax liabilities on her total inheritance that I assume will be worth between $50,000 and $150,000. We both are still working and with Social Security are making about $50,000 a year.

Art in NE
Submitted: 3 years ago.
Category: Tax
Expert:  Jax Tax replied 3 years ago.

Jax Tax : First, the estate should not cash out the stock. The stock should be transferred to her name. She would receive a stepped up basis in the stock so her cost would be considered the fairmarket value on the day of death. When the stock is sold, gain or loss would be determined based on the sale price. No current tax.
Jax Tax : As for inheritance, there is no tax on inheritance. Property is all considered to have a cost basis in her hands of the fair market value at death. Again, tax would be paid on any gain when the property is disposed of. Cash is tax free.
Jax Tax : The only items that may create large tax issues are retirement accounts such as 401
Customer:

So there would be no inheritance, estate or income tax except for capital gains when stock or real estate is sold?

Jax Tax : K, IRA and certain annuities. These are received tax free but fully taxed when cashed out. Can you list the inheritance property?
Jax Tax : You got it. There is no inheritance tax in the US.
Jax Tax : Get an apprasial or some value for realestate now. If sold 10 years down the road it will be harder to determine the value on the date of death for basis purposes.
Customer:

I believe that there is only stock, some cash and his home and presonal pocessions and a commercial property that he owned in partnership with his brother who died the same day That property may be a problem in that it may not be saleable because of chemical contamination. The cleanup may be more than the value and it may be just given to the city where it is.

Customer:

Thank you. That is what we are working on.

Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1377
Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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Jax Tax
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JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions