If you inherited stock from someone, this article is worth reading.
Well, if you just inherited stock, you should have an idea of the Stock’s Date of Death Value.
Hence, this is important especially when you want to sell the stock to pay the tax on the stock sale.
Thus, the value of the stock on the date of death is equal to its worth if it was to be purchased by you.
Also, your tax will be charged on any gain beyond the date of death value.
In this article, we will tell you what exactly the Date of Death value is and how to calculate it.
That’s not all, we will also provide you with other related info on this topic.
Having said that, let’s begin by telling you how the Date of Death Value is calculated.
How Date of Death Value is calculated?
Based on logic, the stock’s initial value should be the closing price on the date of death.
But in reality, the value is determined by equating the highest and lowest price at which the stock is traded.
For instance, if you inherit the stock on April 2nd, you will study the highest and lowest price that day.
Thus, if the stock started at $99.70 that day, then fell to $99 before moving to $101.
After which it settled for $101, the date of death on the stock will be $100.
Hence, this is because the lowest price was $99 and the highest was $101. So now the average of these prices will be $100 ($99+$101=$200. Now $200 divided by 2 =$100).
What if the death of your loved one falls on a weekend?
If your loved one dies on a weekend (Saturday or Sunday), you might want to use the stock price from Friday.
Well, that’s not how it works and it won’t be accurate.
Hence, to calculate the value, you’ll have to add the highest and lowest prices from Friday and Monday.
Once you’ve summed up the prices from Friday and Monday, divide the sum by 4.
For instance, if the highest was $103 and $100 and the lowest was $90 and $99, sum it up
Hence, this should give you $392 ($103+$100+$90+$99=$392). Now, divide the sum by 4, and that should give you $98 ($392/4 =$98).
Where can I find high and low prices for my date?
There are several sites where you can find high and low stock prices for your date.
Hence, all you have to do is search on Google using the company name or ticker symbol.
Thus, you can visit the link below to find the high and low prices for your date:
https://www.nasdaq.com/market-activity/stocks/sbux/historical
Possible exception for Date of Death Value
If a person with a large estate that requires payment of taxes dies, all the assets could be valued after 6 months.
The reason an estate might do this is when the value of the estate has declined within that 6 months.
However, note that the executor cannot pick the value of stocks or assets to get the least value.
Hence, the estate value is calculated on a fixed date. So, if a stock declines in value after the date of death but increases, the Date of Death is still used to determine the value.
Thus, if you find yourself in a state where estate taxes are of concern, you may need the service of a tax attorney.
Conclusion
In summary, this article is a great guide on how to determine the Date of Death value.
So if you just inherited stock from your loved one, this article is a must-read.
But, if you want to ask any questions about this article, leave them in the comment section.
Having said that, thank you for reading!!
