Capital Gain

[Christian]

An elderly client passed on January 3, 2016. Her estate became owner of of shares in two listed companies on that date. The shares have now been sold by the estate executor on 4/1/2016 and 8/11/2016. A capital gain was realized on these sales which will flow to the heirs'  K-1 (1041) forms. In reporting the gain my thinking is the gain is short term even though the shares were bought many moons ago by the owner. Is this correct ?

[Possi]

Long term:

http://finance.zacks.com/inherited-stocks-longterm-shortterm-capital-gains-2198.html

 

[Christian]

I appreciate your quick reply. These shares were not distributed to the heirs but even so the gain is long term.

[SaraEA]

The holding period for inherited assets is always long-term.  If the estate earned dividends and they were reinvested, the gain on those new shares only will be short term.  Check that the basis is correct for the inherited shares.  They take date-of-death value, but many brokerage house computers still list the deceased's original basis.  And note that the gain will only pass through to the beneficiaries if the estate closes or makes distributions during its fiscal year.