confusion in regard to form 8939

[monal]

client retired in 95 at age 65,paid taxes on the lump sum distribution on the unrealized gain and left stock shares with company. Has been getting dividends all these years and not doing the drip thing. Will heirs, if they sell shares, be able to take the FMV of stock when inherited or will they have to use the basis he has in them....confused regarding the form 8939 how will this affect them? this is small estate about 100,000, and all shares are jt with heirs. would this only apply for dying in 2010 or is it necessary for any year decedant dies. I know it is too late for filing this year, I am concerned about any year. Any help u can give me would be appreciated thanks

[DaveO]

What sort of plan are the shares in? If an ESOP then you should get stepped up basis. If it’s in a qualified plan, probably not. One of the retirement strategies for people that had employer stock in their plans was to take a distribution of the stock and pay the tax on the FMV. Then when the stock was sold it would be at the capital gains rate.

[Nashville]

IRD trap

If this is a qualified plan, make sure all parties understand that death does not stop the taxability thereof. Unless the estate takes total distribution on the plan, the beneficiaries still have to pay on it, and there is a limited amount of years to do so.