How do taxes work when selling inherited stock?
You are only taxed on the capital gains the investments have earned since the original owner's date of death, not the total amount you cash out. However, finding the adjusted cost base for decades-old investments spread across multiple banks is incredibly difficult. This leaves executors guessing about how badly the estate will be taxed when they try to sell a portion of the shares.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
Found another way around this?
Share your steps and trade-offs so fellow engineers don't have to reinvent the wheel. No account required.
How do taxes work when selling inherited stock?
- 1Asking online forums like r/personalfinance to confirm tax math before sellingDid this help you?
- 2Researching IRS capital gains tax rules and holding periods onlineDid this help you?
- 3Looking at monthly brokerage statements to find the 'book value'.Did this help you?
- 4Hiring a CPA to determine historical valuations.Did this help you?
In their words
Unedited, grouped by where they were said, most upvoted first within each place, each linked to the thread it came from.
“My mother died 3 weeks ago and i'm the executor. We are in canada. She had roughly $650,000 in non registered investments, $99000 in a RRIF and $250 in a TFSA. How badly will the estate be taxed? how do you figure out the ACB of investments that are about 60 years old and span 3 different banks?”source ↗
“Just want to make sure I have this right regarding selling inherited stock. Is this how it works?”source ↗
“Do I just check the stock price for that day and only take out 250,000 worth and then I won't be taxed. I'd only be taxed on capital gains of the 100,000 that it increased since date of death.”source ↗
Where this came up
People with this problem also raised
- 4What should I do with inherited stock?
- 8How to calculate capital gains tax on selling part of a larger property
- 4How to avoid high fees on an inherited Edward Jones account
- 2Why did my tax bill jump so high after selling stock?
- 2What are the tax rules for inheriting an HSA as a non-spouse beneficiary?
- 5How to invest an inheritance when you have no idea what you're doing