Question

On June 20th of the current year, Richard received 100 shares of stock as an inheritance from his uncle who died on January 20 this year. His uncle's adjusted basis in the stock was $45,000. The stock had a fair market value of $55,000 on January 20. On the date Richard received it (June 20), its value was $68,000. Richard’s basis in the inherited stock is

Answer 1

As per publication 551 on basis of assets of federal tax rules , if stock and bonds received other than the purchase ,then the cost basis will be Fmv value of stocks & bonds or adjusted basis of stock & bonds of previous owner

But in publication 550 of federal taxes rules its is written if property is received inheritance then generally the basis of assets is Fmv value on the date of death of descendent .

So richard basis for inheritance of stock will FMV On the date of death of descendent which is January 20 i.e $55000 .

The Fmv of $68000 on date of received will not be considered as per federal taxes because it will reduce the taxes of goverment in future so , as per federal tax rules inheritance basis for richard will be $55000