inherited account
If an individual inherits a brokerage account that has bonds in it with a current value of $180,000 and liquidates the bond positions and after broker commissions and fluctuating bond values ends up with a value of $150,000, can the individual deduct the $30,000 decrease in value on their tax return?
Permalink Submitted by Alan - IRA critic on Tue, 2014-07-01 23:21
Yes, there would be a LT capital loss on Sch D of 30k. This would first be applied against cap gains, then up to 3k against ordinary income with the rest being carried over.
Permalink Submitted by mk foss on Wed, 2014-07-02 18:41
There is one possible limitation. If some of the inerited bonds were municipal bondsand the date of death value was in excess of par – you are required to amortize the premium. With a municipal bond, there’s no loss when they mature but you will have some loss if they’re sold or called. There’s an IRS publication that explains this. Search for amortization.