Stepped Up Basis on Inherited Stocks

[ExFlyBoy5]

I am in the process of dealing with my DF's estate and have a question on his taxable brokerage account in regards to the stepped up basis.

The current custodian is TD Ameritrade and I (the beneficiary) would like to liquidate all the holdings (all individual stocks) and then wire the proceeds to my brokerage account at VG.

They have a form available to do the stepped up basis, but I *thought* that the brokerage (TDA) would do that automatically? I have looked though lots of FAQs on the TDA website but haven't found anything concrete.

I know that even if they didn't do it automatically, I would be able to make any corrections when filing taxes, but it sure would be easier for it to be reported to the IRS correctly by the good folks at TDA.

As always, thoughts and comments are appreciated!

 

[GalaxyBoy]

I did this last year for my own inherited taxable brokerage account. Schwab provided a 1099 showing the correct stepped up bases for the myriad stocks DF’s FA had him in (but that’s another story). I’d be surprised if TDA wasn’t required to report the basis to IRS.

 

[RunningBum]

I haven't been through this myself, but when I looked at VG I thought the process was that shares were transferred to beneficiary accounts at VG (existing, I assume, if the beneficiary already has one, or new if needed), and then you can sell, transfer, whatever from the new accounts as you wish. My impression was that the step up happens when they are transferred to those accounts. Maybe that's the missing step, you would have to have them transferred from your dad's account at TDA to your own at TDA, and then you can do what you want? Perhaps you can bypass the new account at TDA as you want to, I really don't know.

 

[RobbieB]

Merrill Lynch had no problem with the stepped up basis either.

 

[GrayHare]

If the holdings are in a trust the brokerage will not step up the basis unless you request it via their form. Holdings titled in a decedent's name directly should get the step up automatically, but it's an important point so worth checking.

 

[SecondCor521]

Vanguard stepped up the basis in my Mom's taxable holdings when she passed away. We did, of course, have to notify them of the death (with a death certificate IIRC) and request them to do it.

 

[RunningBum]

I base my comments for VG on https://investor.vanguard.com/inherit/

Later, you can choose whether to move those investments into an account of your own, change them, or even sell them. But first, you'll have to transfer the account into your name. To begin that transfer, give us a call at 877-662-7447. If you're one of a group of beneficiaries, each beneficiary should call to start the transfer.

I looked for something similar at TD Ameritrade since I also have an account there (currently empty), and found nothing. I searched using "Ask Ted" and it suggested I start a live chat.

I'm assuming you've been in touch with TDA about your dad's death and the account, are they not able to answer this?

 

[Rustward]

The basis generally steps to the closing price on the date of death, but there are some exceptions to that. There are lots of sources for closing prices on specific dates.

You might try asking TDA, but I would not expect any brokerage to do anything remotely close to giving tax advice. The best and most reliable answer will come from a good tax person.

 

[Crabby Mike]

I would think you should keep the individual stocks in the inherited account until the basis step-up is recorded, then you can liquidate and transfer the funds. Rushing the liquidation and transfer steps could complicate your tax life down the road.

 

[ExFlyBoy5]

OK, sounds like TDA will do the step up on their own. The holdings were transferred into a TDA brokerage account I already had (never used, though) but the transfer confirmation was devoid of any and all specifics. And TDA customer service? Absolutely terrible. I called, I emailed...I eventually went to a local office...they were all idiots. Which I found to be amazing since they do this stuff every single day!

 

[cathy63]

Are you able to see the basis by logging into your account via their website?

 

[MarieIG]

Request their Estate Department.

 

[Gill]

The basis generally steps to the closing price on the date of death, but there are some exceptions to that. There are lots of sources for closing prices on specific dates.

You might try asking TDA, but I would not expect any brokerage to do anything remotely close to giving tax advice. The best and most reliable answer will come from a good tax person.

Not closing price, but mean market on DOD.
Gill

 

[KB]

I just had two different accounts stepped up after my father died.

Merrill Lynch only needed a verbal request and Vanguard had a Docusign link they sent where I completed it online. Both accounts needed a death certificate after the fact, but that was to retitle the accounts and change the Tax ID to a new Trust ID number.

Vanguard has a special department for dealing with accounts when someone has passed. They assign a rep to handle everything, which is very handy.

 

[hesperus]

I am in the process of dealing with my DF's estate and have a question on his taxable brokerage account in regards to the stepped up basis.

The current custodian is TD Ameritrade and I (the beneficiary) would like to liquidate all the holdings (all individual stocks) and then wire the proceeds to my brokerage account at VG.

They have a form available to do the stepped up basis, but I *thought* that the brokerage (TDA) would do that automatically? I have looked though lots of FAQs on the TDA website but haven't found anything concrete.

I know that even if they didn't do it automatically, I would be able to make any corrections when filing taxes, but it sure would be easier for it to be reported to the IRS correctly by the good folks at TDA.

As always, thoughts and comments are appreciated!

I'm not sure about Ameritrade, but my understanding was that most brokerage houses would do it automatically. However it did take some time to update in the system. When I inherited DF & DM brokerage accts in 2011, wells fargo brokerage did it automatically. Then, when I liquidated some holdings and transferred to Fido, they also took the stepped up basis and updated everything in the new account. They had actually found some mistakes by Wells and corrected them. There were close to 80 different holdings in DF inherited accounts, so it was not something that I wanted to do myself.