Sandy inherited a Exxon Mobil stock in 2018 from her mother’s estate. The stock

Question

Sandy inherited a Exxon Mobil stock in 2018 from her mother’s estate. The stock had been bought in 1970 by her mother for $2 per share. At the time of the inheritance, the stock was worth $95 per share. Which statement below is true?

a. Sandy’s basis will be $2 per share and she will report a gain of $93 per share at the time of the inheritance.

b. Sandy’s basis will be $95 per share and she will report a gain of $93 per share at the time of the inheritance.

c. Sandy’s basis will be $2 per share, but she will not have to report any gain or loss until she sells the stock.

d. Sandy’s basis will be $95 per share, and she will not have to report any gain or loss until she sells the stock.

Explanation / Answer

Correct answer is d. Sandy’s basis will be $95 per share, and she will not have to report any gain or loss until she sells the stock.

The basis in the inherited stock shall be the fair market value of the stock as on the date of inheritance. There will be no tax liability on the inheritance of the stock. Only tax is to be paid on the sale of the shares.

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