Cost basis

Submitted by Michael Gregory on Fri, 2020-10-16 23:40

My client recently received some equity positions from her grandmothers trust. The grandmother died in 1957. The trust was drafted so that all of the stock first went to my clients mother. Then when the mother passed to her daughter (my client). The mother passed in 2019. Much has happened in the original trust with purchases and sales. My question is: do All the positions that my client now receives get a step up in cost basis to the 2019 date of death. Even the positions that might remain from the grandmother who died in 1957? Thank you



Submitted by Bruce Steiner on Sat, 2020-10-17 13:49

  • It depends on the terms of the trust, and how it was created. 
  • When the grandmother died, if the trust was included in her estate, the trust assets received a new basis equal to the estate tax value in her estate.  If not, then the basis is the estate tax value in the original decedent’s estate (the grandfather?), or if it wasn’t included in someone else’s estate, then the basis in the original transferor’s hands.
  • If the trust assets were included in the mother’s estate, they would get a new basis equal to the estate tax value in the mother’s estate.  If not, then the basis of the assets wouldn’t change as a result of the mother’s death.
  • Unless included in someone’ estate, subsequently purchased assets would have a basis equal to the purchase price.
  • Bruce Steiner


Submitted by Michael Gregory on Sat, 2020-10-17 14:06

Thank you so much for your response. Much appreciated!



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