Question

Question regarding stock I am receiving from an inheritence pushing me into a higher tax bracket

Forum|Forum|6 years ago
February 5, 2020
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I am receiving a sizeable distribution from my parents trust since they have now both passed. The letter states "I acknowledge that the in-kind stock assets are subject to income tax on the cost basis amount and not on the fair market value. I acknowledge that I am responsible for paying the capital gains taxes on the in-kind stock assets held in the trust." The difference between the market value and the cost basis is very sizeable and it looks like if I sell the stocks (I do not like the securities) that I will be pushed well into the top federal tax bracket. Am I understanding this correctly that I am paying taxes in the capital gains and is there any way to avoid taking such a large tax hit?

D

DavidD66

Assuming that the letter is correct (and I have no reason to think that it's not) you will have to pay capital gains tax. If you really want to avoid the tax, you could donate the appreciated stock to charity and take a deduction for the full value,- but I don't think that's the solution you're looking for. You don't have to sell all this year. You could sell over a period of time. You could invest some or all of the proceeds in Qualified Opportunity Zone investments and defer (and potentially eliminate some of) the gains. Other than that, there are really any options that will avoid paying the tax other than to continue to hold the securities.

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