Liquidating inherited stocks receiving cash
With traditional IRAs, your heirs will owe income taxes when they take money out of the account. In either case, the best strategy for heirs is to leave as much money as possible in the account.
The tax-sheltered growth of those investments could continue for years, even decades. A spouse inherits Let's start with the easiest case: You're a spouse who inherits an IRA from your husband or wife.
Before we start, let's clear up some confusion about terminology. Funeral expenses and administrative costs (that is, payment to the executor for dealing with all of this) are taken out next.
I have inherited a personal C corp from my mother as stock. Its a personal service corp (engineering) which incidentally I have run for 20 years and still run.
It is a tax on the amount received and is paid by the heir. This means that in many cases an estate is taxed twice -- first by the federal estate tax, then by the state inheritance tax. There's a bright spot, though -- exemptions that reduce the taxable amount.
A common misconception of Roth IRAs is that upon the account holder’s death, his or her beneficiaries do not need to pay any taxes on the inherited retirement account.
This is far from the truth - although Roth IRAs sidestep income taxes, they are not exempt from estate taxes.
Other rules such as early death and withdrawal can complicate matters further.