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
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    Understand how the cost basis for stocks, property and other inherited assets is calculated, and the resulting tax implications ... Read Answer >>
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    I inherited an IRA from my brother. The inheritance tax amount due will offset the state estate tax that would have been ... Read Answer >>
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    My father transferred (gifted) shares of DUK stock into my name when I was born in 1988. This stock grew from about $25/share ... Read Answer >>
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    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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