Stepped Down Cost Basis?

Discussion in 'Professional Trading' started by VoodooMMI, Dec 25, 2008.

  1. I know, if you inherit stock, that you can step up the original cost basis to the value on the date the person died. For example, your father bought WMT stock on June 6th, 1986 at $3.09 per share. He died on November 19th, 2008 when WMT closed at $51.00 per share. You inherited the stock from him. Your cost basis is now $51.00 per share and NOT the original cost basis of $3.09 per share. However, can this work against you as well? Let's say your father bought GM stock at $72.69 on January 2nd, 2000. He died on November 19th, 2008. Is you cost basis now the price on November 19th, 2008 which was $2.79 per share? If so, you just lost a big write off. Would it help any if your father's stock was sold before he dies, let's say the stock was sold on November 12th, 2008 for $3.08 per share. Certainly his estate could use that realized capital loss to offset any realized capital gains. But if there are no realized capital gains, I know the estate could write off $3,000 against ordinary income, but what about the rest of the realized lost, does that tax benefit cease to exist when the owner dies?