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MIKL8888 · Nov 17, 2009, 04:47 PM

I was told by a person at IRS that in 2010: the basis of inherited prop will change from the FMV at time of death of the decedent to the descendants adj basis at time of purchase. The same person at IRS mentioned the law will change back to the way it was in 2009. If this is true I may lose some sleep. I inherited shares of stock in a Co-op and sent in Letters Testamentery to have my name affixed to the Stock Certificate. The Board seems slow moving and I am worried that they will not get to my request until 2010.

Can you verify what the IRS person said and if so, any solution?

Thanks,
Mikl8888

MLSNC · Nov 17, 2009, 07:52 PM

It sounds like you have already inherited the shares. If that is true you will not have to deal with the rules for 2010. You will use the fair market value as of the date of death (assuming the alternative valuation is not used). The date the name is put on the certifcate does not effect the valuation date.

MIKL8888 · Nov 17, 2009, 08:26 PM

Originally Posted by MLSNC

It sounds like you have already inherited the shares. If that is true you will not have to deal with the rules for 2010. You will use the fair market value as of the date of death (assuming the alternative valuation is not used). The date the name is put on the certifcate does not effect the valuation date.

I should explain further. I was the sole Beneficiary in a will and also made the Executor. I've sent in Letters Testementery to request that the Board make me a member of the Co-op based on an old unchanged clause in the By-laws. If you would be good enough to explain at what point would you think I can claim that I inherited the shares? I did get into this point also with the IRS person; she made me think that I should have the right to sell them to establish inheritance. Is it possible that just by the Executor (me) requesting the shares, it shows inheritance? Or as the shares are in the decedent's name and will be transferred to the 'Estate of' or my name, it shows inheritance because I as the Executor can sell them?

Thanks,
Mikl8888

Five Rings · Nov 18, 2009, 09:41 AM

My goodness MIKL, what you say strains credibility.

Since you have all these estate issues, and these properties are obviously valuable, why don't you engage a competent tax professional to guide you through the complexities?

AtlantaTaxExpert · Nov 18, 2009, 10:06 AM

Agreed. Given the nature and complexity of the tax issues, you need to get a competent tax professional to advise you on the estate tax issues.

ebaines · Nov 18, 2009, 10:54 AM

MIKL888 - I second (third?) what the previous responders said about engaging an estate professional. However, I don't understand why you think your date of inheritance would be anything other than the date of death of the decedant who willed you the property - please explain. The way you "show" inheritance is by having the will probated, or as executor by sending a letter to the board with a copy of the decedant's will and a copy of the death certificate.

Also - keep in mind that for 2010 the estate tax rate goes to zero - hence the rule change for estates of people who die in 2010 - this gives the government some chance to collect taxes down the road if/when the heirs sell the property. For 2011 and beyind the current rules are that the estate tax comes back with a vengeance, as we revert back to old (year 2000) rules. It's going to be a total mess.

Five Rings · Nov 18, 2009, 11:34 AM

It's as simple as this; the value of the co-op shares are their value on the date of death or the alternate valuation date. I cannot believe that an IRS responder gave you any other information but this; perhaps you misunderstood.

Your issues with the board have no impact on the tax consequences should you wish to sell the unit.

Five Rings · Nov 18, 2009, 12:17 PM

Whoa; I take it all back.
In 2010 only, the value of inherited property is not its value on the date of death but its original adjusted basis for estates of 1.3 million or more (4.3 million if passing to a surviving spouse).

See, for example this nice review.
http://www.greensfelder.com/publicDo...teGiftTaxL.pdf

Five Rings · Nov 18, 2009, 12:24 PM

Nevertheless, you did inherit this property in 2009 and thus, you get the "stepped up" basis on the date of death.

MIKL8888 · Nov 18, 2009, 09:03 PM

All of you who answered were absolutely Great! I spoke to a lawyer today who verified what you all said. But we came up with one more question: The NYS tax office of Estate info said that a Co-op's shares do not have to be listed in a NYS Estate because they are treated as Intangible Personal Property. This came out of NYS Dept of Tax & Finance, Taxpayer Services Division, Technical Services Bureau, TSB-M-81 (1), Estate and Gift Tax, 2/20/81. If this is true, do you think the IRS wants Co-op shares listed in an Estate valuation?

Thanks, MIKL8888