NUA step up basis at date of death
I executed NUA with brokerage account in January 4 2019. They move the shares from 401K to a taxable account with a NUA share price of $309. November of 2019 I move my taxable account to another brokerage house. At time of death how does brokerage house two get original share price of $309? They need this figure to do the correct step up. For example date of death price $1200. They would exclude the $900 from capital gains calculation.
Permalink Submitted by Gil Shifrin on Wed, 2021-08-25 00:14
I misspoke . The NUA share price on January 4, 2019 was $300.
Permalink Submitted by Alan - IRA critic on Wed, 2021-08-25 02:23
The brokerage should be provided the cost basis per share and the NUA per share when they received the shares. They may or may not track these shares as covered shares. If they do not, these figures must be made available to the beneficiary or executor to report on the beneficiary’s tax return. You did not indicate the NUA cost basis, but that does get a basis adjustment, the NUA itself does not, and additional gains after distribution do get a basis adjustment. So if the cost basis was 100 per share and the NUA 200 per share, then the basis to the beneficiary is 1000 per share. No basis adjustment on the NUA of 200 per share.
Permalink Submitted by Gil Shifrin on Wed, 2021-09-01 01:31
When I moved my account to second brokerage house I was able to enter each purchase cost basis over the years. One example was 10 shares at $50. So for those shares sold at $1200 I would pay capital gains on 300 only (NUA)
Permalink Submitted by Alan - IRA critic on Wed, 2021-09-01 04:00
Most plans use an average cost basis per share for the NUA shares that were distributed. In the example, this was 100 per share. You cannot split out the various purchase prices unless you have written documentation provided by the plan what your purchase price was for various lots of shares. You cannot break this out yourself without documentation from the plan that you could provide to the IRS if they ask. If you have that documentation you would also have to provide your breakdown to the broker, if such broker would accept several different cost basis figures for various lots of shares. If the broker accepted your figures, you would then have to use specific identification when selling shares. Eg, you might specify that you are selling 10 shares with a cost basis of 50 each. The IRS would not accept your figures unless you have this written documentation from the plan provided around the time of distribution.