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Financial Planning / Tax Strategies


Subject:  Re: Carry Over of Capital Losses Date:  9/17/2012  5:25 PM
Author:  Bob78164 Number:  116591 of 127549

papaduke101 writes (in part):

DW and DH have individual brokerage accounts and have always filed only joint federal tax returns since they live in Washington state.

In 2012, DH died. After his death, DW made only a one financial transaction when she sold a stock in her brokerage account that resulted in a $9,000 loss. In their final joint return for 2012, they claim a $3,000 loss.

In 2013 and 2014, DW does not sell any assets and thereby claims a $3,000 loss for each year when doing her federal tax return.

Is my understanding of this scenario correct?

I reply:

I'm not as sure as Phil is. Washington is a community property state. Even though the accounts were titled in each spouse's individual name, it's at least possible that the stock was actually community property, and if that is the case, the basis would step up (or in this case, down) as of the husband's death. --Bob
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