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Book Cost of Inherited Shares

including wills and probate
bruncher
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Book Cost of Inherited Shares

#351163

Postby bruncher » October 27th, 2020, 9:06 pm

I have inherited shares and had them transferred to my account (different broker from where they were held).

My own broker says he hasn't been sent the book cost for each line of stock, which normally comes as part of the data transferred. He says I will need it for CGT if I sell later. But is he right, or is book cost not necessary for inherited stock? Isn't it the value on the day the estate was valued that is the key thing, as I will pay IHT on that?

Dod101
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Re: Book Cost of Inherited Shares

#351179

Postby Dod101 » October 27th, 2020, 10:21 pm

I am sure you are correct. Your acquisition cost is the price on the day you obtained value, not even I think the day of the death, although I could be wrong there, but the date on which the shares were transferred to your title. The cost for the original purchase is totally irrelevant to you.

Dod

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Re: Book Cost of Inherited Shares

#351182

Postby PinkDalek » October 27th, 2020, 10:32 pm

Market value at the date of death forms your base cost. The date of the transfer is irrelevant.

yorkshirelad1
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Re: Book Cost of Inherited Shares

#351283

Postby yorkshirelad1 » October 28th, 2020, 11:06 am

bruncher wrote:I have inherited shares and had them transferred to my account (different broker from where they were held).

My own broker says he hasn't been sent the book cost for each line of stock, which normally comes as part of the data transferred. He says I will need it for CGT if I sell later. But is he right, or is book cost not necessary for inherited stock? Isn't it the value on the day the estate was valued that is the key thing, as I will pay IHT on that?


As others have said, your book cost for inherited shares is normally probate value (as at date of death). Executors should have ascertained that for the estate.

Normally, as recipient of shares from an estate, you don't pay IHT on the gift/shares, the estate should pay any IHT due (before it gets probate and it makes any distribution to beneficiaries).

I've seen situations where the receiving broker doesn't get the book costs sent through, and I've had to supply him with the data.

IANAL.

bruncher
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Re: Book Cost of Inherited Shares

#351354

Postby bruncher » October 28th, 2020, 2:25 pm

Thanks for all the helpful replies, I will find the probate/date of death value and provide to my broker.

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Re: Book Cost of Inherited Shares

#351376

Postby Lootman » October 28th, 2020, 3:13 pm

yorkshirelad1 wrote:I've seen situations where the receiving broker doesn't get the book costs sent through, and I've had to supply him with the data.

I think it is fairly normal for brokers to not supply cost basis data when a position is moved from one broker to another. I am not aware of any requirement for them to do that.

Interactive Investor seems to do a decent job of maintaining and adjusting its cost basis information, but even they get it wrong sometimes when a corporate action happens.

I would tend to not trust the cost basis a broker provides me with unless I originally purchased that position through them.

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Re: Book Cost of Inherited Shares

#351437

Postby scrumpyjack » October 28th, 2020, 5:49 pm

PinkDalek wrote:Market value at the date of death forms your base cost. The date of the transfer is irrelevant.


Whilst HMRC will accept the closing price on the date of death, legally it is the 'quarter up' valuation basis that applies and if death occurred on a weekend the executor can choose whether to use the friday value or the monday value on a per security basis. Most brokers won't bother with that calculation even thought it might give a lower IHT bill!

note 'quarter up means that if the closing buy/sell prices of a security are, for example, 100p/102p the probate value would be 100.5p, not the mid market 101p.


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