Personal Investments • Cost basis step-up for a joint owner account

I'm trying to figure out if I am entitled to a cost basis step-up in the following scenario:

Background:

• I opened a brokerage account in 1996 and have been using it to purchase stock and deposit my exercised stock options.

• The 1099s all reference my SSN.

• The last transaction was in 2009, and I've been holding onto the stock ever since, only withdrawing dividends.

• I added both my parents to this account as Joint Owners with Rights of Survivorship in 2005.

• All the money deposited into this account for purchasing stock was originally mine, as were the exercised stock options I transferred in; nothing was deposited by my parents.

• My dad passed away in 2019 and my mom passed away a few weeks ago.

When I contacted the brokerage to remove my parents as joint owners and add new beneficiaries, their Beneficiary Services department sent me a form to fill out for the cost basis step-up because my parents were joint owners.

I assumed that I am NOT entitled to a cost basis step-up after my parents passed away, because (a) I deposited all the money into the account, and (b) the exercised stock options that I transferred in the account belonged to me.

Any chance that I am mistaken, and I really am entitled to a cost basis step-up due to my parents passing away?

The Beneficiary Services representative has been trying to convince me that I am entitled to this step-up, because I live in California and it's a community property state. But I don't see how community property relates to this... I wasn't married to the joint owners (my parents!), and instead, the joint owners were married to each other.

Thanks.

Statistics: Posted by AliceLB — Wed Sep 25, 2024 2:52 pm — Replies 10 — Views 431

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