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TwoCybers asks:

<<If I have stocks that have appreciated at the time of my death, generally speaking are the capital gains taxed?>>

If you die with those stocks still in your possession, then the capital gain will not be taxed for income tax purposes. The market value of those shares, though, will be counted as part of your estate. Estate taxation begins this year when all of your assets (stocks and all else) exceeds $675K.

As you pointed out, your heirs will receive the shares at market value. If they sold immediately, then there would be no income tax due for them, either. Any subsequent gain from the day they receive those shares is subject to tax based on short-term or long-term capital gains rates with a holding period as measured from the date they inherit the shares.

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