estate account
Client passed away 12-22-07 with 2176 shares of P&G @ $74.08 DOD price. This was in a brokerage account. worth $161,198.08.
The brokerage account was turned into an estate acccount.
the shares were sold in the estate account @ 70.25. worth $152,564
the executor (daughter) is the one receiving the proceeds.
questions:
a. does the daughter get the step up in share price at $74.08 (date of death)?
b. does this mean she has a loss of $8334.08?
c. if she sells other stock for gains, she can offset the loss from the sale of P&G, correct?
Thank you so much for any help,
Douglas
Permalink Submitted by Alan Spross on Sat, 2008-08-16 00:15
Since the shares were sold by the estate, the estate gets the step up in basis. The capital loss in the estate can be used to offset any capital gains for the reporting period of the estate, however if there is a net capital loss (eg if these were the only capital transactions), the estate beneficiary (daughter) is not able to report the net capital loss until the year the estate terminates. At that point any remaining net capital losses would be passed through to her on a K1.
If the estate remains open and the beneficiary meanwhile sells shares or her own for a gain, the net capital loss must remain in the estate until the year the estate terminates. At that point she would get the estate cap losses to offset against her own gains or against 3,000 of her ordinary income.