Inherited Stock and Cost Basis
March 11th, 2013
I just inherited some stock from my uncle, and I know that he bought the stock for more than the present cost. Should I find the original cost, or do I use the cost as of the date I inherited the stock?
If you ask any accountant or business owner, calculating the cost of something is tricky and ever-changing. And when figuring out the “cost basis” for stock, one is often left scratching their head. Needless to say, “cost basis” is incredibly important when it comes tax time, especially if it was a bequest or gift.
So what if you inherited stock? It’s fairly common, but how do you determine the value for that? That’s the complicated calculus of the “cost basis.”
If you think about it, stock represents a value that is forever changing on the basis of the market itself. Those ups and downs of the market can make it a bit difficult to calculate actual gain over the life of one individual. The wrinkle of how to count for those changing values when stock passes from the hands of that one individual to another makes the wrinkle more challenging.
For a basic introduction to “cost bass” and the value of inherited stock, consider reading a recent Kiplinger article titled “Cost Basis for Inherited Stock.”
Planning for your estate means understanding what your assets are and what their value is to your heirs. Accordingly, the understanding of cost basis is imperative to you and your heirs.
Reference: Kiplinger (April [edition], 2013) “Cost Basis for Inherited Stock”