Does anyone have information on how the IRS is treating the sale of PRU shares that were given to insurance policy holders at the time of demutualization?
Has anyone sold the shares given to them back then? I would appreciate learning how you handled the sale on your income tax return that year.
Whatever you inherit, it always remains in the same category as the deceased owned it. A house remains a house. Stock remains stock. Etc. In other words, it "retains the same flavor", i.e., tax treatment.
Inherit shares of Prudential? You inherited stock shares so if you sell them you report them as sold shares of stock, subject to those tax rules. Etc.
If you inherit any stock, the cost to you is the market value on the day of inheritance--NOT the value of the decedent.
Sounds strange, but that's IRS rules. Often you have no idea of the decedent's basis in things, especially stock shares and houses.
You may keep what you inherited or sell it--either way, time will pass before you can sell it. THEN you will pay tax on the gain from the day you inherit it until the day you sell it.
You guys are very funny. No wonders the IRS have auditors in the field auditing. Some of you are way off base here and should be audited, except the IRS will not change your return to benefit you so you won't get looked at.
PS contact a CPA
ha ha Everyone needs to check with IRS at irs.gov
Many incorrect responses here.
I asked about the basis on shares given after the demutualization of PRU. Since posting that question, another court decision has come down the pike, and I am happy to learn the basis of these shares is the value on the day they were given to me! Somewhat like inheriting those shares!
But I know several people who sold their shares years ago and paid tax on the total sale amount. You can only amend tax returns for 3 years, so they are SOL.
I'm not following you. If someone dies and you inherit shares your basis is the market price on the day of death. The basis from the orginal owner (decedent) is in effect reset. So if the stock was $10 your bases is $10 and your capital gains (or losses) are anything above (below for losses) that amount at the time you sell...not zero?
There was a lawsuit filed which last I heard is in appeal process. The gist is that shares issued to policyholder was implied monies put into Pru via premiums paid so hense the basis would be the intial price of the stock at issue. This means your basis is not zero. The filing suggest that people submited an adjusted return to preserve their claim to the correct basis.
There was a new court decision -- the IRS has decided to allow sellers a cost basis of $30 a share, the value it was on the day it was issued to them.
That $30/share price should be checked. I think it was a few cents lower. Check this site for the first day issue price.
This is good news for those who have not sold yet. Bad news for those who sold more than 3 years ago and claimed $0 basis. IRS only allows you to amend tax returns filed in the last 3 years.
from my recollection, anyone that is the originial owner during the conversion from mutual to public, the rec'd shares were valued @ $35 for the basis. so if you sold for $50 and held more than 1 year it's a LTG of $15