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Financial Planning / Tax Strategies


Subject:  Basic Questions Date:  2/8/1999  7:49 PM
Author:  Badger18 Number:  9774 of 127549

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?

The next 2 Qs have nothing to do with death (or IRAs).

Are capital gains on mutual funds held less than 12 months considered short or long term gains? The rationale for considering them long term gains would be that the fund might be assumed for tax purposes to have held all its shares for more than 12 months already.

(Assuming gains on mutual funds held less than 12 months are short term gains...) What happens if I make monthly contributions to a fund for 15 (i.e. more than 12) months and then make a withdrawal? If I have a gain, will it be a short or long term gain? I bought some of my shares more than 12 months ago and some less than 12 months ago.

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