How will inherited company shares affect my taxes? 5 Answers as of July 08, 2013

I unknowingly inherited 5% shares of a family company. I have never dealt with anything moneywise or even signed anything for the company stating I have shares. How will this affect my taxes?

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Law Office of B. Keith Martin
Law Office of B. Keith Martin | B. Keith Martin
Federal government may impose estate taxes on the estate of the decedent (the person who died), but you will not owe any estate or income taxes of any kind. The State of California imposes no inheritance taxes. If you receive dividends on the shares, you will owe federal and state income taxes on them. If you sell the shares you will owe federal and state income tax on the value received in excess of your "basis", i.e. the value of the shares at the time of the decedent's death. Federal taxes may be at capital gain rates if you hold the shares for at least one year; California taxes sale of shares at ordinary income tax rates.
Answer Applies to: California
Replied: 7/13/2011
David Hoines Law
David Hoines Law | David Hoines
If you live in Florida, mostly likely nothing.
Answer Applies to: Florida
Replied: 7/8/2013
Steven J. Fromm
Steven J. Fromm | Steven J. Fromm & Associates, P.C.
The receipt of a gift or bequest is not taxable income under Federal or PA law. However, if you later sell the shares there could be a capital gain or loss. You have a basis in such shares based on their date of death value and that is the what you would compare to the amount of sale proceeds for purposes of gain or loss. Be sure to get the basis for your shares from the executor/rix now so you do not have to chase down this information years from now.
Answer Applies to: Pennsylvania
Replied: 7/12/2011
The Schreiber Law Firm
The Schreiber Law Firm | Jeffrey D. Schreiber
Inheritance does not create any tax liability to the beneficiary just because they receive an inheritance. Your tax issues are any income you receive in the future and any gains if you sell the shares in the future for more than what they were worth when they were inherited.
Answer Applies to: California
Replied: 7/12/2011
Tomas Ayuban
Tomas Ayuban | Tomas Ayuban
You won't have to recognize anything until you dispose of the stock. At that time, if you sell the stock for more than it was worth at the time it was bequeathed to you, you will have to recognize a capital gain. Likewise, if you sell if for less than the value it had when it was bequeathed, you will be able to recognize a capital loss.
Answer Applies to: Florida
Replied: 7/12/2011
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