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Inherited stocks qualify for long-term gain

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in Small Business Tax

Q. My father bought stocks about May 1 last year and passed away in September. I am the sole beneficiary of his estate. If I sell the stocks after May 1, will they qualify as long-term capital gain? M.R., Montvale, N.J.

A. Yes. In fact, you don’t even have to wait until May to sell the stocks and earn that lower rate. That’s because inherited assets are always treated as long-term assets for capital gain or loss purposes, regardless of how long the decedent or inheritor actually held the assets. (Normally, a capital asset must be held longer than one year to qualify for favorable tax treatment.) Tip: On Schedule D of Form 1040, write “Inheritance” in the space where you’re required to put the acquisition date.

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