Inherited Stock

DEFINITION of 'Inherited Stock'

A stock that an individual obtains through an inheritance after the original holder has died. The cost basis for the stock is based on the market value of the security upon the donor's death. If the stock value increased during the time it was held by the deceased, its cost basis is "stepped up" when ownership is transferred .

BREAKING DOWN 'Inherited Stock'

Unlike gifted securities, for tax purposes, the security is not valued at its original cost basis. Only the appreciation from the day of inheritance is subject to a capital gains tax.

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RELATED FAQS
  1. How do I determine capital gain or loss for stocks held in excess of 20 years?

  2. What is an adjusted cost basis and how is it calculated?

    Learn what adjusted cost basis is, how it is calculated, and why this metric is important for investors, business owners ... Read Answer >>
  3. Can I give stock as a gift?

    Stocks, bonds or any other securities can be transferred as gifts. Giving the gift of stock also has benefits for the giver. ... Read Answer >>
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    The basis attributed to IRA assets that you inherited remains the same. Since you are a spouse beneficiary and you elect ... Read Answer >>
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