My mother bought 100 shares of a mutual fund for $1000 ($10 per share). contributed nothing. I am listed as a joint tenant (JT TEN) (I assume with right of survivorship, at least that was the intent). My mother is considered the principal owner of the fund, i.e., it is in her social security number and she pays the taxes on the dividends.
when she dies, do I get stepped up value for my new cost basis or her original cost?
tks all.
Joint tenants are considered to be equal owners, so you get stepped up value for her half, keep the original basis for your half. When she bought the fund in joint name your $500 half was a gift to you.
If your state has an inheritance tax, her half would likely to be subject to it.
That sounds right in theory, but it's more complicated than that. Under ?2040, the entire value of joint tenancy property is included in the estate of the decedent, except to the extent that the surviving joint tenant is shown to have provided consideration. (The rule is different for spouses.)
The entire value of this property is considered part of the decedent's estate for tax purposes, because the surviving joint tenant supplied no part of the consideration for it.
Under ?1014(b)(9), since the entire value is included in the decedent's estate, the surviving joint tenant gets a stepped up basis in the whole of the property, not just half.
tks all, wow lotta implications.
bw
Have something to add? Share your thoughts — no account required.
Ask the community — no account required