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inheritance tax from grandparents

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nateman_doo
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2017/08/10 18:48:57 (permalink)
My wife's grandmother passed away and left her some stock.

It isn't all that much, but we have to start an account with the financial institution to get the stocks transferred to her.

I read so many different things in regard to taxing. I read that if the stock gains value, the value is set at the time of death, so capital gains Taxes must be paid.

So if the stock value is 10 dollars at the time of seath, and it grows to 11 by the time she cashes put, she has capital gains Taxes on the dollar profit.

Is there a set inheritance tax since its not immediate family?
#1

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    bill1024
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    Re: inheritance tax from grandparents 2017/08/10 19:14:08 (permalink)
    I believe it is anything over 5 million dollars is taxable. I do believe the estate pays that first.
    When you sell the stock you will either pay a gain like you said, or take a deduction if the value goes down.
    That is how it worked for me.
    And no, it was not over 5 million dollars!!
     
    The Estate has to settle and pay any taxes owed to the feds, and the state she lives in, maybe the state she works in if out of state.
    Also the brokerage account you get will have the stock basis cost figured when you set up the account.
    Things may have changed since I had to deal with this, I would talk to the estate/your lawyer or you accountant.
    But I am pretty sure you will be ok. At the time, we did not have to pay taxes on the money, stocks or property.
    Just gains of property value when we sold.
    post edited by bill1024 - 2017/08/10 19:25:37

     
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    Grey_Beard
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    Re: inheritance tax from grandparents 2017/08/10 19:49:51 (permalink)
    Bill is correct. The executor should have an estate lawyer that can assist with this. The gains on the stocks are not estate related but are considered normal taxes. Estate taxes are only payable if the total stock given exceeds $5 million. Each month you will get a statement from the investment firm that holds the stock outlining the changes. Each year you will get a tax statement to be used when filing your taxes which outlines the tax implications for the year. If the stock pay dividends, this is also considered income. Consult with the investment firm over what you want or are concerned with regarding income and taxes.


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    Randolla
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    Re: inheritance tax from grandparents 2017/08/11 13:51:52 (permalink)
    This is actually an ideal situation for you. The estate pays any tax before you receive the stock.  You avoid all of the gains that the grandmother may have had on the stock.  If the grandmother had sold it before she died, she would have been liable for potentially decades of taxable gain which would have diluted the value of the cash (proceeds of the stock sale) before she gave it to your wife.  In this case since the grandmother died, the stock is valued at the date of her death value and your wife is only responsible for any gains or losses when she ultimately sells it.   

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    nateman_doo
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    Re: inheritance tax from grandparents 2017/08/12 08:05:23 (permalink)
    so if well sell it right away, we pay capital gains tax on such a small amount of gain (or loss)
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    Randolla
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    Re: inheritance tax from grandparents 2017/08/12 10:10:56 (permalink)
    nateman_doo
    so if well sell it right away, we pay capital gains tax on such a small amount of gain (or loss)


    Correct.
     

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    Randolla
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    Re: inheritance tax from grandparents 2017/08/12 10:51:46 (permalink)
    nateman_doo
    so if well sell it right away, we pay capital gains tax on such a small amount of gain (or loss)


    A note of caution:  You have not said if the stock is held in some sort of retirement account such as a IRA, 401K or pension. 
     
    If it is, you can either cash in the stock and pay income tax on the TOTAL amount or cash it in over 5 years and pay the tax each year.  Regardless of what you do, the account has to be liquidated within a 5 year period.
     
    Remember, this only applies to some sort of tax  deferred retirement account.

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    #7
    nateman_doo
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    Re: inheritance tax from grandparents 2017/08/12 12:01:16 (permalink)
    She used to work for a company, and the company have her stock over the years. I don't think it is a specific 401k, just stock.
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    bcavnaugh
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    Re: inheritance tax from grandparents 2017/08/12 12:13:51 (permalink)
    Roll it over to your 401 or IRA Accounts.
    I am doing this now and no cost to me or fees to pay.

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    bill1024
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    Re: inheritance tax from grandparents 2017/08/12 15:21:06 (permalink)
    If you don't need the money right away, let it grow. Set it up so any dividends get reinvested to buy more stock.
    That is if it is a good company, or sell and invest in a better stock or mutual-fund.
    Invest it in a 529 college fund for your kids, I seem to remember pictures or your kids in a welding helmet or something.
     

     
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    nateman_doo
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    Re: inheritance tax from grandparents 2017/08/12 15:36:14 (permalink)
    bcavnaugh
    Roll it over to your 401 or IRA Accounts.
    I am doing this now and no cost to me or fees to pay.


    I have 2 pensions, 2 401K's , & (god willing) social security for later
     
    I also have debt and a mortgage.  We would rather use the money now to make some debt go away.  
    #11
    nateman_doo
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    Re: inheritance tax from grandparents 2017/08/12 15:43:30 (permalink)
    bill1024
    If you don't need the money right away, let it grow. Set it up so any dividends get reinvested to buy more stock.
    That is if it is a good company, or sell and invest in a better stock or mutual-fund.
    Invest it in a 529 college fund for your kids, I seem to remember pictures or your kids in a welding helmet or something.
     


    heh, yes I remember that picture.  I have already transferred my Army benefits to them for school.  The Post 9/11 GI bill.
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