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Merlo
Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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My father passed away in 2007. He was receiving dividend

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My father passed away in 2007. He was receiving dividend checks and we had no idea why until we researched and found out he had common stock in manulife financial. We just finished doing the paper work to have them transferred to my name and sold them accordingly. at the time of his death the shares sold for $40.56 per share. We sold them for 13.12 per share to settle his estate. What will our tax liability be.

Hello JA Customer,

 

In the year 2007, the estate tax exemption was $2 million. Did your father's entire estate including these stocks exceed that amount?

 

Also, what state did your father reside in?

 

 

Customer: replied 7 years ago.
He resided in MA. He had no assets other than these shares.

Hello againCustomer

 

If your father's entire estate consisted of these stocks, and if the total value was not more than $2 million, then no federal estate taxes would be due on the value of the stocks themselves. The state of MA estate tax would only apply if his entire estate was worth more than $1 million. You would use the market value of the stocks on the day he died to determine the value for estate tax purposes.

 

Since you received these stocks as an inheritance, your basis in the stocks is the market value on the day your father died, which you indicated was $40.56 per share. If you now sold those stocks for only $13.12 per share, you have a loss of $27.44 per share. You would report this loss on Schedule D of your tax return.

 

Capital losses that you have must first be used to offset any capital gains you have for the year. If your losses exceed your capital gains, you may deduct up to another $3,000 of the losses against your ordinary taxable income. The remaining losses are then carried forward and will be used on your future tax returns until they have all been claimed.

 

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Thank youCustomer/p>

 

 

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