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dear fools,

i'd really appreciate it if someone could help me figure out how to report my capital gain on an inherited stock accurately. here's my situation:

i sold some XOM stock this year. this was stock i'd been given from my mother through the uniform gift to minors. she had been given it by her mother, who died in 1966. i turned 21 in 1991.

Q: what is the basis price for the stock? i'm told that the basis price would be the price the stock closed at on the day my grandmother died. (the stock was standard oil new jersey.)

is that correct? let's say what i sold in 2000 was 200 shares of XOM at $80 5/16 per share. Exxon (and then ExxonMobil) has, since 1966, split as follows:

1976 2 for 1
1981 2 for 1
1987 2 for 1
1997 2 for 1

so should the basis be 12.5 shares multiplied by 80 3/8 (which is what new jersey standard oil closed at on the day of my grandmother's death)? if so, the basis would be $1004.69. the sales price is 16,062.50. so is my capital gain $15,057.81?

i have no idea if i'm doing this right.

any help would be appreciated!

---infinitejester




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Your calculation appears correct.
If I have the facts correct, your mother inherited this stock from your grandmother at the death of your grandmother. Therefore, your mother's basis in the stock was its value as of the date your grandmother died. You can be pleased your grandmother did not give it to your mother while your grandmother was still alive, because probably your grandmother also had profit and then the basis would be what your grandmother paid for it!
You were given the stock by your mother while she was alive. (hopefully she is still alive!). You sold the stock. Your capital gain is the selling price minus your mother's basis, calculated above.
Amazing what long-term buy and hold can do!
Best wishes, Chris
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Q: what is the basis price for the stock? i'm told that the basis price would be the price the stock closed at on the day my grandmother died. (the stock was standard oil new jersey.)

One small nit to pick, which shouldn't alter your capital gain to any major extent: The basis for the price of inherited stock (as opposed to mutual funds shares) is the mean share price on the date of death, not the closing price.
WTR
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thanks very much for the info.

any idea where i can find out what the mean share price of that stock (standard oil new jersey) was on that day in 1966?

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Easiest course of action....

Find your way to a decent library. They probably have the New York Times on microfilm. Look up the price in the paper dated one day after the date of death. (This was inherited stock, wasn't it?)

Ira
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