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Old 10-14-2015, 02:46 PM
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What is my tax cost basis on inherited shares in a joint tenancy stock account?

I am wondering under what circumstances can you step-up both halves of a spouse-inherited joint stock account?

I inherited stock from a joint tenancy stock account I opened with my husband in the late 1980s in the state of Oregon. We moved to California in 2002 and only reinvested dividends until his passing a few years ago. What tax basis do I use if I decide to sell the stock this year? Do I have to treat the original stock purchase and Oregon-based stock reinvestments as non-community-joint tenancy property and then treat the California reinvested stock purchases as community property? Or everything as quasi-community property? Lastly, and most importantly, am I allowed to step-up both halves or only his one-half to FMV on date-of-death?



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Old 10-15-2015, 01:23 AM
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I inherited stock from a joint tenancy stock account I opened with my husband in the late 1980s in the state of Oregon. We moved to California in 2002 and only reinvested dividends until his passing a few years ago. What tax basis do I use if I decide to sell the stock this year?=======>>FMV as other inherited shares; The cost basis for half the stock is stepped up to the value on the date of death.
In general, if you inherit it before 1/1/2010,
the cost basis is "stepped up" from the
original cost paid by the deceased owner
to the FMV on the date it was
bequeathed to you;
If yo inherited during 2010, then,

Do I have to treat the original stock purchase and Oregon-based stock reinvestments as non-community-joint tenancy property and then treat the California reinvested stock purchases as community property?====>>Now you are a full year resident of CA and non resident of Oregon, so,I guess you need to treat the CA reinvested sto ck as community pty in CA state. For more info, you need to contact CA BOE

Or everything as quasi-community property? Lastly, and most importantly, am I allowed to step-up both halves or only his one-half to FMV on date-of-death?
=======>> In non- community property state laws, when a married couple own stock jointly and one spouse dies, 50 % of the cost basis is stepped up /down to the price on the date of death. However, in states with community property laws, the entire basis is stepped up / down. A state's rules for determining the cost basis for surviving spouses apply for both state and federal tax purposes. For both federal and state capital gains tax purposes, stock owned jointly with a deceased owner other than a spouse is handled based on the proportion of the original investment made by the deceased. For example, if the deceased made 40 percent of the original investment in the stock, 40 percent of the cost basis is stepped up / down to the price on the date of death.



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Old 10-15-2015, 02:37 AM
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Thank you for your reply. My husband passed away in late 2010 and I did not select the special election (1.3MM + 3.0MM) while preparing the estate tax returns. Our joint brokerage account in question was funded only by my husband and myself and was titled as joint tenancy in both Oregon and California.
1. Did the brokerage account need to be specifically titled as community property WROS in order to take advantage of the California community property full (both halves) step-up now during the 2015 stock sale? Or is the joint tenancy brokerage account title assumed to be community property in California? I believe real property in California has to be specifically titled and recorded as community property WROS in order for a house inheritance to have full (both halves) basis step-up.
2. So are you suggesting, to be accurate in reporting the correct tax basis during this year's stock sale in our brokerage account, I am allowed to step-up only one-half to d-o-d FMV for the Oregon original purchase and subsequent div reinv purchases and then, I can fully step-up (both halves) to d-o-d FMV for the California div reinv purchases?



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Old 10-15-2015, 08:57 PM
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Follow up question about inherited shares in a joint tenancy stock account, please

Thank you for your reply. Unfortunately, one sentence in your response was cut off and not legible (the part where you wrote "If yo inherited during 2010, then, " ??

Also, if I could, I have follow up questions:
My husband passed away in late 2010 and I did not select the special election (1.3MM + 3.0MM) while preparing the estate tax returns. Our joint brokerage account in question was funded only by my husband and myself and was titled as joint tenancy in both Oregon and California.
1. Did the brokerage account need to be specifically titled as community property WROS in order to take advantage of the California community property full (both halves) step-up now during the 2015 stock sale? Or is the joint tenancy brokerage account title assumed to be community property in California? I believe real property in California has to be specifically titled and recorded as community property WROS in order for a house inheritance to have full (both halves) basis step-up.
2. So are you suggesting, to be accurate in reporting the correct tax basis during this year's stock sale in our brokerage account, I am allowed to step-up only one-half to d-o-d FMV for the Oregon original purchase and subsequent div reinv purchases and then, I can fully step-up (both halves) to d-o-d FMV for the California div reinv purchases?

Thank you..



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