Inherited Stocks
Hello Terry!
I so enjoy hearing you on the radio every week. Today, you spoke briefly about the sale of stock that was inheirited.
In 2020, my mother passed and I inheirited roughly $25,000 in Exelon stock. A few years later it split(?) and I now own Exelon and Constellation Energy stock.
The total worth of both stocks is now approximately $110,000. I’ve reinvested all dividends.
If I sell, my understanding is I would be responsible for capital gains in the amount of $85,000 ($110,000 – $25,000). Is that correct? Does it make any difference that I’ve reinvested all the dividends?
Thank you very much for sharing your expertise!
Terry Says
This is where you need professional tax advice. Your cost basis is the value on the date of her death.
I’m presuming that you paid ordinary income taxes every year on those reinvested dividends.
The price at which you reinvested each year is your cost basis for those shares.
The company registrar might be able to help you with that, if you didn’t keep records.
Either way,it’s going to be difficult to calculate the gain when you sell. An accountant might advise on just making an estimated cost basis for those I don’t think that would trigger the IRS’ attention.
Or you could just wait and hold your shares till you die if you don’t need the money. The your kids would get a new cost basis on all of it as of the date of YOUR death!
