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Inherited mutual funds and taxes?

Asked by: tmoran 1509 views YA Discussion

I inherited a mutual fund from my mother upon her passing. My question is, what kind of taxes am I going to have to pay? I have no intention on selling the mutual funds now but come next april, do I just pay taxes on the dividends? When I do sell, am I just going to have to pay taxes on the gains from when I inherited them? Thank you.

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3 Answers

  1. Wayne Z on Aug 02, 2012 Reply

    Sorry for your loss.

    Any dividends received will be taxable.

    The funds themselves will only be taxed if you sell them and you are only taxed on the gain between their fair market value as of the date of her passing and the sales price. Also, sales of inherited assets are always considered long-term gains/losses regardless of if you hold them 1 year or not.

    Assuming that the executor did not choose an alternate valuation date, you can go online and establish the fair market value of the funds to determine the basis for the funds.

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  2. Bobbie on Aug 02, 2012 Reply

    After the end of the tax year you will receive a consolidated 1099 from the payer of the income from the mutual fund amounts and you will use that information to correctly report the different types on income that is received from this mutual fund on your 1040 income tax return during the 2013 tax filing season for this purpose and time in your life. Good Luck
    Hope that you find the above enclosed information useful. 08/02/2012

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  3. Judy on Aug 02, 2012 Reply

    I assume this is not in a tax deferred retirement account like an IRA.

    At the end of the year, you’ll get a form from the mutual fund company showing dividends and capital gains distributions, if any. Those will go on your tax return.

    And yes, when you sell, you’ll pay tax on the increase in value from when you inherited them minus amounts you already paid tax on (the dividends and capital gains) if you left them in the account.

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