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Financial Planning / Tax Strategies


Subject:  Basic Questions Date:  2/8/1999  7:49 PM
Author:  Badger18 Number:  9774 of 123001

I have some basic tax questions. Thanks much in advance for the help.

The first two Q's deal with investing outside of an IRA.

Am I correct in understanding that shares of stock are transferable to your heirs at a stepped-up cost basis, or some such term? Meaning that if I buy XYZ Corp now for $20/shr, and when I die it's worth $200/shr, my heirs receive it at a cost basis of $200/shr and only pay capital gains taxes, when they sell the stock, on any gain above the $200/shr price.

Is this true for mutual funds? If not, are mutual funds transferred at original cost basis?

The next Q deals with IRA investing.

What happens to a) stocks and b) mutual funds held in an IRA when you die? I.e. can they be transferred at a stepped-up cost basis?