Ask Terry Questions Inherited stock cost basis for inheritor

Inherited stock cost basis for inheritor

By Terry Savage on August 19, 2019 | Taxes & Economy

Must the inheritor of a mutual fund use the market value value of the fund on the day of transfer as the inheritors cost or can they use the price paid by the giver if that gives the inheritor a higher cost when the inheritor sells the fund?

Terry Says

If you inherit stocks or mutual funds, your “cost basis” is the value of the investment as of the date of death of the original owner.  If the money was held outside a retirement account, you can sell immediately –with no tax consequences.  Or hold for a longer term, and possibly get a capital gains if held over one year –again using the cost basis as of the date of death.

If the account was an IRA, then depending on your relationship with the decedent (spouse or not) and depending on whether the decedent has already started taking RMDs, there are other withdrawal and tax considerations.



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