When unmarried individuals own property in joint tenancy, each owner's share of the property-and therefore the part of the basis that's stepped up when that owner dies-is determined by contribution to the purchase price. Since that could have a major impact on the taxes due when the stock is sold, check this point carefully if you live in one of these states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin. In community property states, the basis of the entire community property-not just half-may be increased to date-of-death value upon the death of one spouse. Basically, the survivor is treated as though he or she inherited half of each share of stock, with its basis increased to the date-of-death value. If you own stock or other assets with a spouse as joint tenants or tenants by the entirety-forms of ownership often used by married couples that ensure that on the death of one co-owner the survivor becomes the sole owner-the basis of what is transferred to the survivor is adjusted upward on the death of the co-owner. If the executor of the estate chooses to value assets using the alternate valuation date for estate tax purposes, the value on that date becomes your basis in the inherited stock. Using this exception, called the alternate valuation date, may make sense if the value of the estate's assets has fallen during the six months following the owner's death. The exception can set the basis of inherited property at its value six months after the owner died, or when it was sold if during that six month period. If the stock had lost value while owned by your benefactor, your basis is "stepped down" to the date of death value.Īn exception applies only when an estate is large enough for a federal estate tax return to be filed. If the stock price falls before you sell it, you can claim a tax loss. You are responsible only for the tax on appreciation after you inherit the stock. Assuming the asset had appreciated since the original owner purchased it, the basis is "stepped up" to current market value, so the income tax on any profit that built up while the previous owner was alive is forgiven. When you inherit stock or other property, your basis is usually the value of the asset on the date of death of the previous owner. Tip: If you get stock or other assets as a gift, ask your benefactor for information about his or her basis-and keep that information with your records. In other words, you don't get to write off a loss that occurred while the donor owned the securities. If you sell for a loss, though, the basis is either the previous owner's basis or the value of the stock at the time of the gift, whichever is lower. In other words, the basis is transferred along with the property. If you sell for a profit, your basis is the same as the basis of the previous owner. The basis of securities you receive as a gift depends on whether your ultimate sale of the stock produces a profit or loss. If you sell the 100 shares for same $40 each, and pay $100 commission on the sale, you have a $200 loss-your $4,100 basis minus the $3,900 proceeds of the sale. The total cost is $4,100 and the tax basis of each of your shares is $41. at $40 a share, and you pay a $100 commission.
#QUICKEN DELUXE FOR MAC TIPS ON TRACKING PAYCHECK INCOME PLUS#
The tax basis of stock you purchase is what you pay for it, plus the commission you pay. For one thing, your basis depends on how you get the property in the first place. This is why it's so important to accurately track the basis of any investment you own.Īlthough this sounds like a simple concept, it isn't necessarily so. The higher your basis, the less gain there is to be taxed-and therefore, the lower your tax bill. Your basis is essentially your investment in an asset-the amount you will use to determine your profit or loss when you sell it. Sometimes it's called "cost basis" or "adjusted basis" or "tax basis." Whatever it's called, it's important to calculating the amount of gain or loss when you sell an asset. It's not very exciting, but "basis" is one of the most important words in the lexicon of taxes.
0 kommentar(er)
