Last week I received a question from a client about the cost basis of stock received from the estate of his mother, who passed away in 2010. I explained that he would receive "stepped-up" basis, meaning his cost for tax purposes would be the market value of the stock at the date-of-death. But then I remembered that it is 2010 and the tax rules have changed. Now the cost basis of stock received from a decedent who died in 2010 is the decedent's original cost - if the value of the estate exceeds $1.3 million. If the estate will be less than that, you can skip the rest of this post and breathe a sigh of relief. If more - this post's for you.
Those inheriting from a decedent who has less than $1.3 million at death will see little change under these rules--the basis of all qualifying assets can be increased to fair market value (FMV) at date of death. Executors of estates with assets over $1.3 million will need to know the decedent's basis in all assets in order to allocate the basis increase. There are, of course, many shades of gray within the new rules, and we are here to help you understand how the rules affect you personally. For specific answers regarding your situation, please contact me.
We will continue to monitor legislation for developments that affect your taxes.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).