Stock cost basis - decedent

[FEDUKE404]

Client sold inherited stock. Cost basis needs to be calculated based upon stock market values on date of death.

Date of death was on a weekend, so it is my understanding the per share price is based upon an average for the Friday and an average for the Monday after, in other words an "average of an average."

One set of rules I found said to use (for the average each day) the high and low price for the stock. Another set of rules I found said to use the opening and closing price.

I have not been able (long day?) to find a definitive answer in any IRS pub. Does anyone know which method is correct?

NOTE: The stock price changes were considerable, even over two separate trading days, and there are a large number of shares involved. So.....getting the correct answer is relatively important!

Thanks in advance.

FE

[New York Enrolled Agent]

I have not been able (long day?) to find a definitive answer in any IRS pub. Does anyone know which method is correct?

Here is a paste from Rev Ruling 68-610. The regulations give the answer.

Section 20.2031-2(b) of the Estate Tax Regulations provides that where the decedent dies on a Saturday or Sunday, the fair market value per share as of the date of death is the average of the mean sales price on Friday and the mean sales on Monday.

[FEDUKE404]

Answer

Here is a paste from Rev Ruling 68-610. The regulations give the answer.

Section 20.2031-2(b) of the Estate Tax Regulations provides that where the decedent dies on a Saturday or Sunday, the fair market value per share as of the date of death is the average of the mean sales price on Friday and the mean sales on Monday.

Thank you very much for finding this info.

FE