Inherited Stock

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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 .

INVESTOPEDIA EXPLAINS '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. What does U.S. law say about contingent beneficiaries?

    In the United States, posthumous asset transfers only require the listing of a primary beneficiary. Contingent beneficiaries ... Read Full Answer >>
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    Keeping your beneficiary designations up to date is an important aspect of comprehensive estate planning. Listing a primary ... Read Full Answer >>
  3. What kinds of assets can be included in a revocable trust?

    A revocable trust is an important part of estate planning. The trust document allows a living grantor to receive income from ... Read Full Answer >>
  4. How do you set up a revocable trust?

    A revocable living trust (RLT) is an arrangement in which a grantor transfers ownership of property through a trust. The ... Read Full Answer >>
  5. What types of insurance policies have contingent beneficiaries?

    A contingent beneficiary is a person designated to receive the benefits of an insurance policy or retirement account if the ... Read Full Answer >>
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