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My father died in 1995 and my mother in 2015. Both had

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My father died in...

My father died in 1995 and my mother in 2015. Both had trusts. Now that mom is gone myself and my siblings inherited stocks from both accounts. The executor of the estate has the cost basis from my dad's account from when he died. My understanding is that when he died, my mom assumed his trust. We never received any stocks until mom died in January of 2015. Since we got the stocks after she died, wouldn't the cost basis for both trusts be based on when she died, and not dad's death?

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

KHC is one of the stocks. Originally Kraft in my dads account. Kraft and Heinz merged in 2015. The executor has the base price from 1995 for it, they didn't exist as Kraft Heinz then. They merged after mom died, shouldn't the cost basis be what it was on the merger date?

Submitted: 8 months ago.Category: Tax
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11/16/2017
Tax Professional: Tax.appeal.168, Tax Accountant replied 8 months ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 4,759
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Hello. Thank you for choosing this Q&A service for assistance. My name is***** am reading over your inquiry, if I am able to assist, I will prep my response and get back to you shortly. If I cannot assist, I will release the question back into the question queue so that someone else may possibly assist you. Thank you for your patience.

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Tax Professional: Tax.appeal.168, Tax Accountant replied 8 months ago

Based on what I have been reading, the executor of the estate is calculating the cost basis correctly. When your father passed away and the stocks were transferred to your mother, she should have rec'd a step up in basis for the stock, meaning that her cost basis in the stock was the FMV of the stock on the date of your father's death. SEE BELOW:

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(a)In general Except as otherwise provided in this section, the basis of property in the hands of a person acquiring the property from a decedent or to whom the property passed from a decedent shall, if not sold, exchanged, or otherwise disposed of before the decedent’s death by such person, be—

(1) the fair market value of the property at the date of the decedent’s death,

(2) in the case of an election under section 2032, its value at the applicable valuation date prescribed by such section,

(3) in the case of an election under section 2032A, its value determined under such section, or

(4) to the extent of the applicability of the exclusion described in section 2031(c), the basis in the hands of the decedent.

REFERENCE SOURCE:

https://www.law.cornell.edu/uscode/text/26/1014

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Still writing....

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Tax Professional: Tax.appeal.168, Tax Accountant replied 8 months ago

As for the merged stock, I am checking on that. Will be back with you shortly.

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Tax Professional: Tax.appeal.168, Tax Accountant replied 8 months ago

Based on the stock merger calculator, the answer to your question is not necessarily. Two of the factors in determining the cost basis of merged stock are as follows;

1) The Purchase date for original stock (Kraft);

2) Total cost basis for original stock (Kraft), including commissions and fees, adjusted for previous spinoffs (total, not per share);

As other factors are involved, you can refer to the stock merger calculator to get a better idea of what the cost basis of the merged stock should be.

REFERENCE SOURCE:

http://www.costbasistools.com/mergers/mergers.php

Stock merger calculator

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