On Sep 30, 12:40*pm, Bernie Cosell <ber...[at]fantasyfarm.com> wrote:
- quote -

Thanks all --- it is very clear. I guess since the estate is taxed on
the actual value of the assets at the DoD, the capital gains or losses
those assets might represent are irrelevant (and the tax basis for the
heirs (or the estate, itself, if some assets have to be liquidated)
will simply be *that*value*, as of the DoD).. Appts with account and
lawyer are next week, so at least I understand what's going on
here.... THANKS!

/Bernie\

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On Sep 30, 3:48�pm, ed <edcos...[at]sbcglobal.net> wrote:
- quote -

The Alternate Valuation Date is a factor ONLY if the gross estate
value is greater than 2 Million (2008). Such an evaluation would
generally only be made if the gross asset total has decreased over
that period of time. The "election" is made by the executor of the
estate.

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On Sep 30, 4:37*pm, Alan <sfcnm-...[at]yahoo.com> wrote:
- quote -

Alan is correct. The basis is DOD value or, if a sale is more than 6
months later then DOD, the 6 month alternative date if elected for ALL
assets. Use 1041 Schedule D even if there is no gain/loss. The gains
must be taxed in the Estate and cnnnot be pased through to
beneficiaries if the Estate sells the asset. The the asset is
distributed the beneficiary takes it at the DOD value and is
responsible for the tax when sold.

ed

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Bernie Cosell wrote:
- quote -

on the 1041 Schedule D (income tax return for estates and trusts)
and are included in computing the estate's total income on the
1041. If losses exceed gains, the excess losses remain with the
estate until the final income tax return is filed. I.e., they do
not get passed through to the beneficiaries until the final
income tax return is filed. As to how much of any net capital
gains (long & short) get passed through to the beneficiaries,
that will depend upon whether there is a requirement to
distribute the gains or they are actually paid to the beneficiaries.

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In misc.taxes.moderated, Bernie Cosell wrote:

- quote -

On a big estate, you are subject to estate taxes. You are not
subject to capital gains taxes based on the pre-death basis, big or
small. This may seem like surprising loophole. It means that the
original basis info is not needed.

- quote -

As to whether the 6-month alternate valuation applies and is
something you want to elect, I would take that up with your
accountant.

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On Sep 30, 10:40 am, Bernie Cosell <ber...[at]fantasyfarm.com> wrote:
- quote -

I'm not an accountant, but did go through this process in NY State
with my father's estate 4 years ago. There may be errors here, and
you really should be getting this info from your accountant and
lawyer.

Capital gains/losses are basically irrelevant. An estate is taxed on
its total value at the time of death. You don't need to know the
original purchase price/cost basis/etc of anything, just its current
value. The IRS doesn't let the taxes on cap gains slip by, Congress
does.

Everything under $2 million (for a 2008 death) gets passed along
without tax. Estates with a value > $2M get taxed on the portion over
$2M at a graduated rate, I believe.

There is no automatic 6 month valuation. You can choose to use the
value of the estate at 6 mos rather than the time of death, but you
must do so for all assets (no cherry picking). So instead of the date
of death, you'd be using 6 mos later.

In addition to the estate return, that covers the time of death (or 6
mo later), you must also produce an annual return for all income and
losses while the estate is being settled. That return would include
gains and losses from the time of death to the end of the calendar
year and so on.

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.....and how is it accounted for:

If an estate has illiquid assets that need to be liquidated (at the least
to pay the estate taxes and estate expenses, perhaps also to be able to
make the distributions to the heirs), how are the capital gains (or losses)
handled? I can't imagine that the IRS would just let that opportunity to
tax "slip by" but I can't quite figure out which party(ies?) get stuck with
them.

Also, since the estate is evaluated at the time of death, I assume that the
liquidation would only reflect capital gains (or losses) relative to the
assessed value of the assets at the time of death? And how does the
six-month re-valuation affect this (would the capital gains/losses be
against the *final* assessed value of the assets, either time-of-death or
six months later, whichever is used?) [and yes, this is a real situation
and I'm talking to both my accountant and my lawyer about it -- I'm just
looking for other opinions and/or background on how these kinds of things
work )] Oh, and I guess there'd be parallel questions about the state
estate taxes, New York State in this case. THANKS.

/Bernie\
--
Bernie Cosell Fantasy Farm Fibers
bernie[at]fantasyfarm.com Pearisburg, VA
--> Too many people, too few sheep <--

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >