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Financial Planning / Tax Strategies
|Subject: Re: Survivor's Cost Basis||Date: 12/7/2000 2:13 PM|
|Author: criser||Number: 42609 of 122503|
No need to panic until you know what your state's law says about joint ownership of securities.
The answer depends on state law. If Dad adds son's name to a brokerage account or stock certificate as a joint tenant with right of survivorship and if state law says that one of two joint tenants with right of survivorship have the right unilaterally to partition the stockholding 50/50 (e.g., force the custodian to split the account 50/50 between Dad and son, with son being able to do whatever he wants with his 50%), even though that joint tenant contributed less than 50% of the purchase price (e.g., zero), then, yes, a gift was made from Dad to son equal to 50% of the value at the time the gift was made and son's basis in that 50% is the market value on the date of the gift. The other 50% would be stepped up at the time of Dad's death.
If state law says that one of two joint tenants with right of survivorship does not have the right to unilaterally partition the holding except to get back what he or she contributed, then there would be no gift if Dad contributed 100% of the purchase price for the stock, 100% would be included in Dad's estate and there would be a 100% basis step-up to the date of death value upon Dad's death.
Nothing in this message is to be considered as the rendering of legal advice for specific cases. Readers are responsible for obtaining such advice from their own legal counsel. Messages posted on this discussion board are intended to provide information for educational and informational purposes only.
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