Originally Posted by miffedone
#1;Three of the four children have brokerage accounts, the fourth does not, and asks [insists] that the inheritance be sent "in money" rather than stock when the time comes. I understand that inheriting "stock" will preclude taxes on appreciated gains. If I sweep the stock into the various brokerage accounts, no tax.
#2;What happens if I sell the fourth share and convert it "to money"?
#3;Will it then be taxed and will she receive less?
#1;I guess in general yes; the beneficiary may owe capital gains taxes when he/she sells the stock later. Any stock in the deceased's estate is valued at the FMVon the day the person died. When the beneficiary receives the stock distribution, he/she owes no taxes. However, if he/she decides to sell the stock, he/she owes capital gains tax on the selling price of the stock minus the cost basis and any broker's fees incurred by selling.
#2;A person owes capital gains tax every time he/she turns a profit on a capital good, such as stock.The IRS taxes the selling price minus cost basis. If the deceased held the stock for more than a year, the stock qualifies for LTCG rates, which are 15 percent for TPs whose marginal tax rate is higher than 15%. If a descendant sells the stock at the same price or less than the estate valued the stock, she owes no taxes. If he/she sells it for a price higher than the estate value, he/she owes taxes on anything above the market value at the deceased's death.
#3;as mentioned above