<p>I did her taxes this year. I needed a 1040 because again she got a 1099 misc. I figured it would be relatively easy so I didn’t use turbo tax for it. So far I did it 2 different ways and am not 100% certain whether she needs to pay any taxes. When I looked at the 1099 misc on the back, I realized that the small print said that if the activity is sporadic, then it didn’t necessarily need to be classified as a business. Until recently I never used turbo tax or did my taxes myself - I always used an accountant who I still need to use for more complicated tax issues that turbo tax doesn’t handle.</p>
<p>DocT, I believe that it is the same as a house – an automatic stepup in basis to today’s price. Makes no sense but that is what I believe the law says. I’m really good at tax stuff (on things I’ve dealt with) but I’ve never dealt with inheritance and am not a lawyer or an accountant, so please confirm, but I’m pretty sure inheritance leads to an automatic stepup in basis.</p>
<p>My tax life has gotten so complex that I need to use an accountant and I throw the kids into that as well.</p>
<p>Doct, I was told about inherited stocks go to time of inheritance. It took some time, but I found the price of stock at time of son’s grandmother’s death. Still, check with your accountant. This came up because son sold these stocks in 2011.</p>
<p>I’ll ask my accountant tomorrow. My personal taxes are quite complex and sometimes I’m not certain if turbo tax is doing them correctly especially in regards to depreciations, amorization etc in rental real estate etc. The tax laws are way too complex. Even my accountant was confused in regards to some tax stuff that I have him do and he has been an accountant for over 50 years. A few years ago, to settle a question in regards to how to handle taxes, I needed to consult an attorney who specialized in taxes.</p>
<p>We use a CPA for our taxes as well. With property, it is beyond me to figure out depreciation, expenses and the like. When I was single, I did my own returns. When we 1st got married, I did them a few times using TurboTax Premier but then decided it was money well-spent to have the CPA do it & talk with H (who is his buddy anyway). While he’s at it, he double-checks the property manager’s figures & finds that the property manager balances things perfectly, to the penny! (Can you tell they have mutual respect?)</p>
<p>2012 will be crazy, because we will have inheritance issues; hoping the CPA remains healthy enough to do the return next year. Got an extension for this year’s 2011 returns.</p>
<p>Am still weighing risks and benefits of investing in real estate vs. other possibilities and haven’t decided yet. Am still interested in reading others thoughts and ideas. We keep losing money in the stock market & I’m tired of it. Will probably keep the retirement funds invested but probably not much else. Will keep emergency fund liquid as well in some form or another–6 to 12 months of expenses.</p>
<p>Thanks again to everyone for their thoughts about windfalls. We all have different life situations but it is interesting to read different insights. Everyone is in such a different place, on many levels.</p>
<p>I’m going to be asking my accountant about inheritance taxes as well. Fortunately a significant portion of my father’s assets were transferred to an irrevocable trust years ago with me as the trustee to avoid potential issues with nursing homes. As it turned out, it was never needed.</p>
<p>I don’t think there are federal inheritance taxes, as long as the estate was under $5 million, which many estates are WELL under (at least that’s what the estate attorneys I have spoken with all seem to agree upon). Our state follows the federal laws, so there should be any HI estate taxes either.</p>
<p>I need to ask the CPA about tax implications from the death though and hwat happens to the basis on investment assets as well as real estate.</p>
<p>In CT, I think its 2.5 million and there are probate taxes to pay. Looking at a manual from a few years ago, its $6300 on less than 100,000 and at a million its 42300.</p>
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<p>Could you provide an example of how you’ve lost money in the stock market recently? It has been on a major bull market for the last three years.</p>
<p>At one point we had over $275K in mutual funds at Dean Witter–when we liquidated those mutual funds, we netted about $35K. That’s a rather significant loss, to us.</p>
<p>DocT, if your dad had estate planning & set up a trust, probate costs are probably avoided or minimized. That’s what we did with SIL & cut her assets WAY down by putting most of them in trust. The attorneys & CPAs can help sort things out.</p>
<p>Did you watch your monthly statements and see it going down or did it drop very suddenly? Was there account churning going on? I manage my own stuff - I don’t trust mutual fund managers or brokers.</p>
<p>You are correct for that part that is in the trust because he already paid taxes on it. However when the trust was created, the elder law attorney made certain that my father would have enough to pay (including social security and a pension) for a nursing home for a short period of time (expecting the state to pick up the tab after that). What was left was in both our names except for half the house and his stock. That stuff has to go through probate.</p>
<p>I don’t recall, but am shocked at how much it lost in value. Will see how much energy I or H have to actively manage our assets because as you say, it’s hard to trust anyone–including fund managers or brokers. Others I know have lost over $800K & over $1M, so we’re all getting tired of investments and obviously aren’t doing as well as you in the market.</p>
<p>I lost a ton in the 2000 - 2001 debacle. I’m still writing it off.</p>
<p>Another dual here.</p>
<p>Certain events last week made it probable I will have some kind of windfall in the foreseeable future. A rather large one in my experience. </p>
<p>I had always been practical and let common sense triumph. Maybe I will splurge this time. I don’t get many windfalls in a monetary sense, large or small.</p>
<p>Depending on how much the windfall is, it makes sense to splurge SOME while doing something “sensible” with the bulk. At least, that’s how H & I see it. As you can see from this thread, there are MANY different views on the situation.</p>
<p>^ I have been thinking about it a little. One idea is to set a % of the windfall and do whatever - a luxurious around the world cruise ? A Cartier watch I wanted forever (but have no use for ) ? Or a nice holiday for the whole family, if the schedules allow. Frivolous but …memorable </p>
<p>I guess the rest should go towards something like buying extended health care insurance … build more safety nets for us and the kids.</p>
<p>Studies have consistently found that events bring more happiness and are remembered much more than “things.” Of course, YMMV. 
Enjoy dreaming and planning! ;)</p>
<p>^^that’s why I like to spend money on traveling. Of course, once you’re old and senile, it won’t make any difference as you won’t remember who you are, who anybody else is and where you ever went.</p>