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The Coca-Cola Company Message Board

  • moochcat moochcat Dec 19, 1997 10:19 AM Flag

    Need some advice about some Coke stock I

    Hoping some of you more saavy stock traders can give me
    some direction.

    I recently inherited 500 shares of Coke from my grandfather.
    He purchased the stock approx. 20 years ago. I'm not planning
    on cashing the stock, what happens with the capital gains if
    he were to die before I cash it in?

    How about taxes.

    Any help on this would be appreciated.

    moochcat

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    • How do you inherit something before someone dies, I believe they call that a gift. Can only give $10,000 a year to a person tax free.

    • If it was a gift, I think the basis (for the purpose of figuring capital gains tax) stays at the price at which the giver acquired it. If you inherit it, I think the estate pays any tax and a new basis is established at wherever the price was when you acquired the stock.

      You can be given up to $10,000 without any tax whatever. More than that is subtracted from the estate tax exemption (the amount that can be subtracted from the total value of the estate before figuring the its taxable value) -- currently $600,000, but rising gradually over the years to $1.1 million.

      My guess is that you should claim a new basis at the price you received the stock, but your grandfather should be made aware that as such, the value would reduce the exemption on his estate from estate taxes, and consequently could affect other heirs (because their inheritance would be reduced because the estate might be subject to more tax).

      That's what I think, others probably know more/better.

    • Inherited stock receives a stepped up basis, which
      means no capital gain income recognized for appreciation
      when Grandpa held the stock.

 
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