If a decedent bought a stock for $1000 several years ago and that stock is worth $5000 on the date of death and the estate sells in for $5500 a couple of months later, what gain is the estate taxed on, $4500 or $500? An estate with a simple will with considerable assets that stipulates all assets be sold and the proceeds be distributed to the heirs.
Just for curiosity, what would the heir's basis have been if the stock in the above example was to be distributed to the heirs?
I am an inexprienced executor of a very recently deceased close relative's estate and will be using an as yet unselected CPA to do all the tax returns but I would like to know in advance the tax treatment of capital gains.
Thanks.