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T Schwartz · Nov 23, 2006, 10:03 AM

My parents were joint owners of a large amount of 1 company's stock. My Father died this year. We all agree with my Mother that reducing risk by liquidating some of this amount and putting it in a safer, more diversified instrument(s). Is there an advantage in selling some of this in this year(of father's death). Should it be offset by sale in same year of stock having a LT capital loss? We've been told that his portion of the sold proceeds gains is less taxable or nontaxable. What's the truth in that? I would greatly appreciate any help on this issue as current CPA, keeps insisting we don't want to pay "all that tax" - Eventually though, won't we have to pay capital gains on it (barring catastrophic losses to the estate value)?

AtlantaTaxExpert · Nov 24, 2006, 04:05 PM

The value of the basis of your father's portion of the stock (assume it to be one-halfof the number of shares) is accelerated to to its FMV at the time of his death. That is the reason the proceeds from the sale of HIS stock is much less taxable or non-taxable.

Diversifying your mother's portfolio makes sense, but it should be done gradually to minimize the tax.