Is the sale of recently purchased stock that was held in a joint account with a now-deceased spouse considered a short-term or long-term sale?

by Susan D. Jarvis, CPA | May 01, 2019
askacpaicon

My wife passed away in 2018. After she passed, I sold some stock that was held in a joint account. It was held just a few months, so normally it would be considered a short-term sale. That said, I've read that when you sell inherited stock, it is always considered a long-term sale. I don't think of this as inherited since it was held jointly. Is this sale considered short-term or long-term? Or perhaps half and half?

Your spouse’s holding period becomes your holding period. So, if the security was owned for less than 12 months when it was sold, the gain/loss is short-term. The only change you will realize is a change in basis. You get a step-up in basis to fair market value on your wife’s date of death for half of the shares since they were owned jointly.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Susan D. Jarvis, CPA, is a sole practitioner in Nazareth, Pa.

Disclaimer
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
Ask a CPA

Search the most frequently asked finance and accounting questions and read the responses from PICPA members. Always consult a CPA before taking action.

Search