Another NUA question
Client did the NUA in 98, paid taxes on the contribution portion only. The value of the stock doubled by the time he died. He had about a $600k NUA that didn’t get stepped up but the $900k in gains since the distribution date does step-up. Since his death the stock has lost about $300,000, can that loss offset some of the NUA gain when it is sold?
Thanks,
Mark
Permalink Submitted by Alan Spross on Tue, 2008-02-26 01:38
First, see other thread regarding the tax return.
But assuming that NUA was elected, I calculate the NUA to be 31.18 per share, so your client’s adjusted basis would be the DOD value (median price on DOD) less 31.18 to reflect no step up on the NUA.
If she sells shares, her basis is per above. The Sch D entry would show her LT gain as the amount realized less the cost basis calculated above. Again, this discounts any splits or dividend reinvestments. The recent drop in value could therefore erase some or all of the NUA.
Perhaps you have other evidence that NUA was in fact elected in lieu of averaging or the capital gain option (yet another option for pre 1974 cap gains that might show on the 1099R). You could also fairly easily eliminate the possiblity that he ever rolled any of this over to an IRA which was yet another possibility.