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Author: papaduke101 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: Stepped Up Cost Basis For Inherited Stock Date: 1/18/2010 2:11 PM
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Given the repeal of Estate Taxes for 2010, how will this effect beneficiaries of stock regarding the "stepped up cost basis" if they decide to sell inherited stock this year?
Thx.
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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 108579 of 121572
Subject: Re: Stepped Up Cost Basis For Inherited Stock Date: 1/18/2010 4:26 PM
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Given the repeal of Estate Taxes for 2010, how will this effect beneficiaries of stock regarding the "stepped up cost basis" if they decide to sell inherited stock this year?

This is one of many things left up in the air by Congress's failure to act like grownups. (That criticism is retroactive and applies to all Congresses since they put this mess in motion.) I think the first $1.5 million FMV gets a stepped-up basis and the rest doesn't. How that distinction is made I have no idea.

My advice. If someone dies before the law is changed and leaves a gross estate of more than $500,000 get thee to a lawyer.

Phil
Rule Your Retirement Home Fool

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Author: papaduke101 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 108580 of 121572
Subject: Re: Stepped Up Cost Basis For Inherited Stock Date: 1/18/2010 4:43 PM
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Thx, Phil. I need not worry since I am not a beneficiary to any goodies.
**
The colossal confusion that our dearly elected officials, past and present, have created regarding Estate Planning will challenge the best estate lawyers.

Joe

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Author: dusty2004 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 108584 of 121572
Subject: Re: Stepped Up Cost Basis For Inherited Stock Date: 1/19/2010 7:22 AM
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My understanding is the same as Phil's. I stongly agree with his statement to get to a lawyer this year is you have a love one pass to get the asset step up correct or it could make for a mess later.

Dusty

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 108585 of 121572
Subject: Re: Stepped Up Cost Basis For Inherited Stock Date: 1/19/2010 11:11 AM
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Given the repeal of Estate Taxes for 2010, how will this effect beneficiaries of stock regarding the "stepped up cost basis" if they decide to sell inherited stock this year?

I'm pretty sure Phil's got it correct on the taxes. (And I'm certain he's got it correct on Congress acting like grown ups, but that's a topic for a different forum.)

Just remember that the issue is when the stock is inherited, not when it's sold.

If you inherited the stock in 2010, then your basis is affected by the current rules regarding basis. If you inherited the stock 5 years ago and are selling now, your basis was determined by the laws in place 5 years ago - which generally gave you a full step up in basis.

--Peter

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Author: papaduke101 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 108589 of 121572
Subject: Re: Stepped Up Cost Basis For Inherited Stock Date: 1/19/2010 8:57 PM
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Peter,

Just remember that the issue is when the stock is inherited, not when it's sold.

If you inherited the stock in 2010, then your basis is affected by the current rules regarding basis. If you inherited the stock 5 years ago and are selling now, your basis was determined by the laws in place 5 years ago - which generally gave you a full step up in basis.


Outstanding clarification(s)!! Thx.

Joe

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Author: papaduke101 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 108891 of 121572
Subject: Re: Stepped Up Cost Basis For Inherited Stock Date: 2/3/2010 5:11 PM
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Just remember that the issue is when the stock is inherited, not when it's sold.

Permit me to pose a follow up question to Peter's comment last month, that arises after reading some Google articles and MF postings on inherited assets & estate planning.

Let's assume DH & DW have a credit shelter trust and will rely 100% on their lawyer/CPA to handle all future legal/administrative actions when they surface upon their respective deaths. The beneficiaries are children who will adhere to this prudent and necessary decision.
OK -- DH dies this year and he has some stocks/mutual funds in his brokeage account. Should DW, the Executrix, following her discussions with the CPA and his concurrence, contact DH's brokerage institution to update the holdings to the "stepped-up" and "stepped-down" FMV at the time of DH's death? (Ignore the alternative valuation date, for now). The objective in doing this is to establish an accurate "base-line" for the beneficaries who will inherit the assets and subsequently decide how to incorporate them in their financial plan or sell after DW dies and the all her and DH's assets are distributed.
Thank you for your insights.

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