Short or Long Term

[Kram BergGold]

Client died on 5/31/16. There were two stocks held in her Revocable Trust that were bought on 5/31/16 and later in 2016 sold while in the Irrevocable Trust that started when she died. I am thinking since the Irrevocable Trust starts upon her death on 5/31 these two items do not get a step up in basis. Am I correct? DUH! NEVER MIND. Since it was bought on the date of death the basis is the value it was purchased at.

[Roland Slugg]

You're right, of course, that since the stock was bought on the DOD, that the FMV and cost would be the same.

However, the subject line in your post is regarding ST or LT, and that is a legitimate question. If the stocks were bought BEFORE the woman died, then they would automatically be treated as held long-term even if sold less than a year later.

In fact if I'm not mistaken, a decedent's estate, as a taxable entity, officially commences the day AFTER the DOD, and that the actual DOD is counted as the last day of the decedent's final tax year.