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Strayer Saylors & Associates, Inc.

Did the Decedent Own Capital Assets?

If the decedent owned capital assets, the fair market value (FMV) of those assets at the time of death must be determined for estate and probate purposes and for determining the basis of the assets in the hands of the beneficiary.

FMV is determined as of date of death (or estate valuation date). This means that if the heirs sell inherited property soon after the decedent's death, the result will usually be little or no gain. FMV will be used to figure depreciation, as well as for figuring gain or loss on sale.

Valuation of inherited property is generally taken from the estate tax return (if any) unless the taxpayer (heir) can prove a different value. If there is no estate tax return, probate papers may provide an "inventory" showing values of items in the estate.

CAUTION: For assets inherited from decedents who died during 2010, the beneficiaries' basis will depend on whether the estate was subject to the estate tax or elected out of the tax and chose instead for the beneficiaries basis to be determined under the modified carryover basis regime. Regardless of which method the executor selects estate tax with stepped up basis for the assets or the modified carryover basis a beneficiary should contact the executor for information as to the basis of assets that he or she inherits.

  • Stocks, mutual funds and other readily traded securities: The closing value on the date of death is generally accepted as the FMV. The stock listings for the date of death from a newspaper will provide that information for most stocks. For more complicated portfolios, contact the brokerage firm and request a listing of all securities held by the decedent along with the closing price on the date of death.

  • Real Property: Depending upon state law, for estate tax and probate purposes, real property generally must be appraised by a qualified appraiser. However, if there is no requirement for probate or estate tax filing, then the executor or heirs will need to establish the FMV through other means such as a qualified appraiser or comparable sales.

The valuation process can be complicated, and it may be to your benefit to consult with this office as soon as possible for assistance.