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What is the procedure when someone inherits an account of…

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What is the procedure...

What is the procedure when someone inherits an account of stocks and bonds worth approx. $300,000?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

A sister passed away on June 5,2017 and 2 sisters are scheduled to inherit equally 2 accounts, one an ind. account and one a trust account.Each account of stocks and bonds is worth ca $600,000. Please let me know the procedure for just the individual account as I realize the trust account is rather complicated. Thank you.

Accountant's Assistant: Is there anything else important you think the Accountant should know?

Would it be better to accept the cash or the stocks and bonds dividing the total amount of the s&b holdings equally?

Submitted: 4 months ago.Category: Tax
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12/6/2017
Tax Professional: Barbara, Enrolled Agent replied 4 months ago
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 5,784
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

If they inherit the stock, there is no tax implication until the stocks are sold.

If they inherit the cash from the sale of the stocks, there is no tax implication because inheritances are not subject to tax in the U.S.

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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Tax Professional: Barbara, Enrolled Agent replied 4 months ago

Because of the tax reform bill that is currently being decided, my best advice would be to have the stocks sold and the cash distributed.

Part of the tax reform bill is to eliminate the "stepped up" basis for inherited stock, which would mean the cost basis to be used when figuring out capital gains would be the deceased's cost basis instead of the fair market value at the date of death.

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Customer reply replied 4 months ago
Thank you! With regard to the trust account, with both of the sisters the beneficiaries does the same answer re the individual acct. still apply?
Tax Professional: Barbara, Enrolled Agent replied 4 months ago

Yes.

The cash would be best because it is uncertain what is going to happen with inherited stocks because of the tax reform bill.

My goal is to provide you with excellent service. Please take a moment to rate my answer with a 5-star rating to let me know that I have achieved my goal.

Thank you and best regards,

Barb

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