Inheritance, Cap Gains Tax question
Are executors allowed to allocate/distribute capital gains to take advantage of certain beneficiaries’ lower tax rates? In other words, lets say after liquidation of certain stock the estate is worth 100k, 10k of which is capital gain. Assuming there are 2 beneficiaries who share alike under the will, but one is the 28% tax bracket, the other in the 15% bracket, could the executor allocate all 10k of the capital gains to the beneficiary in the 15% bracket in order to take advantage of the 0% long term capital gains rate?
Permalink Submitted by mk foss on Sun, 2014-02-02 23:44
Generally this would not be allowed. It’s possible to distribute capital gains to beneficiaries in connection with an asset distribution, but that’s relatively rare. Normally capital gains can only be distributed from an estate on the final return and then it goes by percentages.