Inheriting shares and taxes........

[powskier]

It looks like I may be receiving a small ( 20k) inheritance from my parents.

If they sell the shares  and give me cash they have to pay 15% capital gains tax. Correct?
We are wondering about the situation if they just transfer shares to my taxable account.

If I receive the shares and then sell them a few days later, I think I am on the hook for short term gains or losses with the cost basis starting on the day I received them. Correct?

If I receive them and hold for a year , I think I am on the hook for 15% cap gains with the cost basis starting on the day I received them. Correct?

We are trying to figure out the smart way to do this. Any ideas , opinions or experiences with this kind of fortunate experience?

[seattlecyclone]

You may be overthinking this. When someone inherits shares, the cost basis is reset to whatever the value of the shares was on the date of death. Capital gains taxes are only owed on the difference between the cost basis and the sale price. If the death happened fairly recently, this difference is likely not very large, and so the tax will only end up being a couple percent of the overall value. Don't sweat it too much.

Also, the value of the shares on the date you receive them is irrelevant. Gifted shares retain the same cost basis that they had from when the giver acquired them.

[powskier]

Thanks, no death involved thankfully !
Cost basis reset to date of transfer?

"Gifted shares retain the same cost basis that they had from when the giver acquired them." I did not realize this. Then it seems to be far better for them to sell and take the 15% tax hit rather than me taking a 28% tax hit.

[seattlecyclone]

Thanks, no death involved thankfully !
Cost basis reset to date of transfer?

Oh, so it's just a regular gift then? Again, the date you receive the shares doesn't matter. The acquisition date and cost basis transfer over. If you and your parents have the same capital gains tax rate, it doesn't matter who sells the shares.

[powskier]

Got it. Thanks.