Clients were married and had stock in joint name: husband 1st and joint was wife.
Husband passed away
does the wife get a steped up basis as of date of death?
or
Does she just become the new owner and the cost basis stays the same when they bought the stock?
Thank you,
Douglas
What if they held the shares as tenants in common? In your example, would H’s estate get a new basis for H’s portion and W’s basis for her portion remain the same?
Yes, H’s portion would usually pass via will and would get the basis adjustment to DOD value. W’s shares would not have a basis adjustment.
Alan_iracritic’s answer applies to common law states. In community property states the stepped-up basis is generally 100% of DOD value: https://www.irs.gov/publications/p555#en_US_201901_publink1000168816
I would expect that the presumption that TIC titled property in a CP state would override the CP unless the spouse could provide evidence that the property was mis titled.
Yes, it can get complicated. This reference discusses many scenarios, including a case where the community property is not explicitly titled as such: https://www.cpajournal.com/2017/08/18/greatest-hits-community-property-step-basis/
Permalink Submitted by Alan - IRA critic on Fri, 2019-07-12 20:27
Her basis is (old basis + DOD basis)/2. So basis before death is 50 per share and DOD value is 100, then her basis is 150/2 or 75. Effectively all the shares have a new basis of the average of old basis and DOD value. The DOD value is figured by averaging the high and low share values on the DOD.