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Old 08-04-2017, 03:08 PM
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Allocation of basis "step up" upon death of joint owner

Husband dies, wife inures to brokerage acct owned JWROS. 1014 gives us a step up in basis for husband?s ?half?. This is not a community prop. state.

My understanding is that assuming (1) basis of 100% of account before husband?s death was $10,000, (2) fmv at of 100% of account at husband?s death was $90,000, then wife?s basis in account = (10,000 + 90,000)/2 = $50,000 and that such $50,000 is allocated among the account?s holdings.

Surviving spouse's brokerage firm and accounting firm say no, husband?s ?half? can be segregated and receive a full step up of $45,000 while wife?s half can be segregated and will have a basis = $5,000. This would of course allow "husband's half" to be liquidated with no or minimal cap gain.

To me this is incorrect and flies in the face of facts surrounding the ownership of an undivided interest in property. However, i can't find authority for my position.

Help! Fine if i am wrong but I need to be certain . . .



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Old 08-05-2017, 07:38 AM
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Quote:
Originally Posted by RWM66 View Post
Husband dies, wife inures to brokerage acct owned JWROS. 1014 gives us a step up in basis for husband?s ?half?. This is not a community prop. state.

My understanding is that assuming (1) basis of 100% of account before husband?s death was $10,000, (2) fmv at of 100% of account at husband?s death was $90,000, then wife?s basis in account = (10,000 + 90,000)/2 = $50,000 and that such $50,000 is allocated among the account?s holdings.

Surviving spouse's brokerage firm and accounting firm say no, husband?s ?half? can be segregated and receive a full step up of $45,000 while wife?s half can be segregated and will have a basis = $5,000. This would of course allow "husband's half" to be liquidated with no or minimal cap gain.

To me this is incorrect and flies in the face of facts surrounding the ownership of an undivided interest in property. However, i can't find authority for my position.

Help! Fine if i am wrong but I need to be certain . . .

My understanding is that assuming (1) basis of 100% of account before husband?s death was $10,000, (2) fmv at of 100% of account at husband?s death was $90,000, then wife?s basis in account = (10,000 + 90,000)/2 = $50,000 and that such $50,000 is allocated among the account?s holdings. ==> here is an easy example ofr YOU ; say Husband and Wife are married and hold their investment accounts and home in joint tenancy with right of survivorship. Their jointly held stock mutual fund investments have a tax basis of 50k dollars with a current market value of 100k dollars. Their home has a basis of 70k dollars and a current market value of 125k dollars. When Husband dies, Wife inherits the assets held in joint tenancy (without probate) and has a new stepped-up basis for FHusband's share of the assets.
Stock mutual fund investments: 75k dollar tax basis
Home residence: 97.5k dollar tax basis (35k + 125k/2)
In your case, 5k+90k/2=$47.5K


Surviving spouse's brokerage firm and accounting firm say no, husband?s ?half? can be segregated and receive a full step up of $45,000 while wife?s half can be segregated and will have a basis = $5,000. This would of course allow "husband's half" to be liquidated with no or minimal cap gain. >As mentioned above



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