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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19224  
Subject: Re: Income Taxes at Death Date: 5/9/2000 1:59 PM
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Jmitch asks:

<<Let me make sure I have this right, albeit a slightly different spin. I'm the executor for an estate right now. I liquidated the stocks in the deceased's brokerage account aprroximately 6 months after the date of death. The cash proceeds will then be distributed to the heirs as specified in the will. The capital gains/losses are therefore paid by the estate prior to the distribution. Are these long term or short term gains/losses?>>

As the executor, you chose the date at which estate assets were valued. That could be the date of death or an alternate valuation date six month's after death. In either case, the fair market value of all estate assets is determined as of the valuation date used, and the estate is taxed based on that fair market total. If the estate was less than $650K (the person must have died in 1999), then the estate will not be taxed. It's my understanding that any gain over the fair market value of the shares from the valuation date will be taxable to the heirs -- not the estate -- on distribution of the proceeds from the sale. If the sale occurred more than a year after the valuation date, that gain is long-term. Otherwise, it's short-term. You should report it as such to the recipients. And only the gain over the fair market value on the valuation date you used for the estate counts for that purpose. Any gain over the decedent's cost until the date of death is not considered.

Be aware I am not a tax expert. You should confirm this with your own tax advisor. You could also ask the question over on the Tax Strategies board where those experts can be found to see what they have to say.

Regards..Pixy
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