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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2189
Experience:  IRS licensed Enrolled Agent and tax instructor
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My grandmother (European) left me with some family

Customer Question

My grandmother (European) left me with some family share/stock when she passed away in Europe, as an inheritance. I became a US citizen. The stock is a family share (company) in Europe. I sold my portion of the share to a close relative who is wiring me (bank in the US) as quarterly payments. Is this income taxable?
Submitted: 6 months ago.
Category: Tax
Expert:  emc011075 replied 6 months ago.
Hi. My name is ***** ***** I will be happy to help you.As US citizen you are required to report your worldwide income. However you only need to report INCOME. Transferring money between accounts or making deposit (wire or checks) is NOT income. Receiving an inheritance is NOT income. But the difference between the value of the inheritance and sales price IS taxable income.Here's what you need to do. You will have to figure out how much was the stock worth (your portion) on or around the day your grandmother passed away. Than you deduct it from the selling price.For instance if you inherited 100 share of a stock that was traded $5 per share on day you inherited it (day your grandmother passed away), your inheritance value was $500. When you sold the share for $6 per share, you have $100 capital gains you will have to report ($600 - $500 or $6 - $5 *100).
Customer: replied 6 months ago.
The stock is family owned company's share and not publicly traded. So, how do I measure the value of the share on the day I inherited them?
Expert:  emc011075 replied 6 months ago.
Well, that's something IRS guidelines are not very specific about. Even if the company is not publicly traded, the share must still have a value. The company must have been somehow appraised during the probation/inheritance process. Since there's inheritance tax almost in every county in Europe, the company must have been assigned some value. Value of one share will be total value divided by number of share.
Customer: replied 6 months ago.
In which category/form would I need to report this type of specific income?
Expert:  emc011075 replied 6 months ago.
You would report it on Schedule D as long term capital gains regardless how long you actually owned it. Inherited property is always treated as long term. Your basis will be value of the stock on day of inheritance and your proceeds will be total value you received for it.
Expert:  emc011075 replied 6 months ago.
You will start with form 8949 (type of Schedule D worksheet) and than transfer the amounts from there to schedule D.
Expert:  emc011075 replied 6 months ago.
I see you read my respond. Do you have any questions? Is there anything else I can help you with today?And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.

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