Is sale of inherited stock long term?

Inherited Shares Any capital gain or loss that is the result of selling inherited stock is always long-term. This rule applies regardless of how long you or the original owner owned the shares. You are not responsible for taxes on any gain that occurred while the original owner was alive.

Inherited Shares Any capital gain or loss that is the result of selling inherited stock is always long-term. You are not responsible for taxes on any gain that occurred while the original owner was alive. However, you cannot use any capital loss on the shares that occurred prior to the date of death as a tax deduction.

What happens to inherited stock when you sell it?

If you sell it for less than your inherited basis, the result is a capital loss, which you can use as a tax write-off against other investment gains or other income. You report a capital gain or loss on your income tax return for the year the inherited stock was sold.

Are there long term or short term gains on inherited stock?

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Gains or losses on stock investments are normally long-term if you own the shares for more than one year. If you owned the stock for one year or less, gains and losses are short-term. Inherited stock might seem to pose a problem because the deceased owner made the investment on one date and you inherited the shares on another date.

What kind of taxes do you pay on inherited stock?

Gains from the sale of inherited stock are classified as long-term capital gains, even if you sell the shares shortly after obtaining them. The tax rate for long-term gains is lower than the rate on short-term gains or your regular income tax rate. Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007.

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How are capital gains calculated when selling inherited stock?

Capital gains tax normally is calculated by subtracting your cost from the sales proceeds. Your cost is called “basis.” A similar process applies to selling inherited stock. You subtract a basis that’s different than cost. Instead of cost, you substitute the fair market value of the stock on the date of death for…