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Investment Income and Capital Gains
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Taxes on Inherited Stocks

My wife is about to sell some stock that she inherited 15 + years ago. A few years ago I moved these stocks from Wells Fargo to Fidelity. After doing so, Fidelity used the "date of transfer" as the actual date these stocks were "acquired". This is incorrect since they are not the same and were acquired and inherited 15 years earlier.

I need to adjust the cost basis of these stocks especially since one of the stocks has lost >75% of its value and will be a big loss when sold. Question is...do I just adjust and correct the date these stocks were acquired on the Fidelity website and then call it a day? Or is there something else I need to do or provide my accountant / IRS to show the date of death or date these were inherited?

Thanks
Eric W

Zip Code: 22207

Re: Taxes on Inherited Stocks

There is a way to report adjustments to the basis reported to the IRS by the financial institutions. You now report individual capital transactions on the Form 8949 (http://www.irs.gov/uac/Form-8949,-Sales-and-Other-Dispositions-of-Capital-Assets).

Please note that the form allows for an adjustment to be put in Columns 6 & 7 to adjust the Gain/Loss reported by the Financial Institution. There is also a link to the Instructions of that form on the IRS page, and you can find more information there.

The IRS does not want you to pay higher taxes than you correctly need to pay.

Zip Code: 01801