Barrons' had a good series on Retirement in today's issue. I have a specific question on the article about "company stock".http://interactive.wsj.com/pages/b-retire.htmBarrons states:Your heirs stand to gain, too. If you hold on to the NUA stock until you die, your heirs will receive a step-up in basis, meaning they will owe capital-gains taxes only on the difference between the price when you died and the price when they sell it. In other words, all of those gains over the years will be passed on free of capital-gains taxes (though not free of estate taxes). If, on the other hand, you roll the stock into an IRA, your heirs won't get this step-up in basis. All distributions will be taxed as ordinary income, and then what's left will be taxed in your estate.However, I've found this elsewhere:IRS Revenue Ruling #75-125 states that the "net unrealized appreciation" NUA (at time of distribution) is "income in respect to the decedent," and is subject to the long term capital gains tax to the heirs, just like any other pension benefit not yet taxed to the deceased. That's why the August 16, 1999 issue of Fortune, Page 120, had this to say regarding company stock in a 401(k): "One consideration: If you never sell those shares, your heirs wind up owing capital gains on the appreciation going all the way to their value when they originally came into your possession. That's a lot more than they'll owe on the other stock they inherit, which is only taxed on the appreciation since your death. If you have a choice, then, sell your company stock to meet retirement expenses and leave other assets to the kids." Question: Does anyone know if the IRS has issued a ruling that supercedes #75-125 and changes the taxation of "company stock" held at death?intercst
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