Liquidating inherited stocks receiving cash

However, you must pay income taxes on any dividends or capital gains from the funds once they are transferred into your name.

liquidating inherited stocks receiving cash-45

If you receive payments of money from an irrevocable trust during the year, it isn’t necessary for you to make the determination of whether to report the payments on your tax return.

The IRS requires the trustee to prepare a Schedule K-1 for each beneficiary when filing the trust’s 1041.

If the fund was worth $50,000 on the day he passed and you sell it a year later for $55,000, you owe taxes on that $5,000 capital gain.

However, if you sell it for $45,000, you can declare a $5,000 capital loss.

The trustee is responsible for reporting all income the trust earns, even if the terms of the trust require beneficiaries to receive all of that income.

However, if the trustee has no obligation to distribute earnings to beneficiaries and accumulates income within the trust, she must pay tax on those earnings using money from the trust.

As of 2012, eight states impose inheritance taxes of between 10 and 16 percent on amounts over the individual state exemption.

If your dad lived in Indiana, Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania or Tennessee, be prepared to pay up if your mutual funds proceeds exceed the exemption.

As a result, either the trust or its beneficiaries are responsible for paying income tax on any income generated by the cash and other assets in the trust.

Tags: , ,