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.

  1. Common Stock Equivalent

    Securities such as stock options, warrants, preferred bonds, ...
  2. Gifted Stock

    Stocks given from one person or entity to another person or entity. ...
  3. Composite

    A grouping of equities, indexes or other factors combined in ...
  4. Runoff

    The procedure of printing the end-of-day prices for every stock ...
  5. Taxable Event

    Any event or transaction that results in a tax consequence for ...
  6. Step-Up In Basis

    The readjustment of the value of an appreciated asset for tax ...
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