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My Father in law died in June, he was end of treatment of…

Customer Question
My Father in law...

My Father in law died in June, he was end of treatment of leukemia and sold all his stocks a week before he died, in December my mother in law died. How do we handle these capital gains? money was never touched and we were told we couldn't get much advice since laws were changing?

Accountant's Assistant: I love the idea of making big money with investments, but there are so many things that could go wrong. The Accountant will be able to help you. Is there anything else the Accountant should be aware of?

Is the death of both of them in the same year as stock cashed in remove some of the tax rate on the gains?

Submitted: 6 months ago.Category: Capital Gains and Losses
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12/26/2017
Tax Expert: levr, Tax Advisor replied 6 months ago
levr
levr, Tax Advisor
Category: Capital Gains and Losses
Satisfied Customers: 33,111
Experience: Working for a large tax preparation service
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All income received BEFORE the death should be reported on the final tax return for teh decedent.

So - all gain realized a week before the death will be reported on form 8949 attached to form 1040 you will prepare for the decedent.

The tax rate will be determined based on total income.

ONLY income realized before the date of death is reported on form 1040.

All income (if any) realized AFTER the date of death is reported on the tax return of the estate - form 1041.

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Customer reply replied 6 months ago
If he cashed them in the end of May, then died 6/2 and Mom just died on the 3rd of Dec.... so is the capital gains rate reduced by her death?Also, would cash gifts given to the two kids draw that gain down? There was no earned income, it's all interest and dividends, SS
Customer reply replied 6 months ago
no calls, everyone is sleepling, excpet me
Tax Expert: levr, Tax Advisor replied 6 months ago

If he cashed them in the end of May, then died 6/2 and Mom just died on the 3rd of Dec.... so is the capital gains rate reduced by her death?

There is no reduction in tax rates based on when you took the money out of the account.

Based on your information - the income was recognized while your father was alive - and should be reported on his tax return.

Inheritance would not be taxable for beneficiaries.

Also, would cash gifts given to the two kids draw that gain down? There was no earned income, it's all interest and dividends, SS

Gifts and inheritance are NOT taxable for beneficiaries and as not deducted for the donor or for the estate.

Amounts passed while the person is alive would be classified as gifts.

Amounts passed after the death are classified as inheritance.

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Tax Expert: levr, Tax Advisor replied 6 months ago

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