Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, September 27, 1993 TAG: 9309240419
SECTION: MONEY PAGE: A-8 EDITION: METRO
SOURCE: MAG POFF
DATELINE: LENGTH: Long
If you keep the stock, and assuming it had appreciated to $14,000, what is the tax basis if you let it go into your estate?
A: In the case of a gift, the recipient assumes the same tax basis as the giver, according to Melinda Chitwood, a certified public accountant with the Roanoke firm of Brown, Edwards & Co.
In the example you provided, therefore, your tax basis would be $5,000 regardless of whether you sell the stock at $10,000 or any other price. You would have to declare all of the gain over $5,000.
If you are still holding the stock when you die, on the other hand, the tax basis for your heirs would be the value at the date of your death.
In the case of your example, your heirs would start with a tax basis of $14,000. In such a case, the gain from the original $5,000 cost of the stock would never be taxed to anyone. Your heirs would pay only on the extra gain over the $14,000.
Chitwood pointed out, however, that your heirs could in effect pay estate taxes on the stock if your estate is worth more than $600,000. If you have a big estate, it might be worthwhile to sell the stock, pay the taxes and give away the money rather than let the estate be taxed at a higher rate.
If your estate is likely to be over $600,000, Chitwood recommended estate planning to determine how your assets should be handled.
Spouse's retirement
Q: My wife and I are approximately the same age.
She is considering applying for Social Security benefits at age 62 under her own earnings record. I do not expect to retire until 65 or later. At my retirement, her spousal retirement benefits under my earnings record would be larger than those she would be receiving under her earnings record.
We understand that, on my retirement, she could apply to have her benefits increased to a level nearly equal to what she would be eligible for as my spouse under my earnings record. We understand that, because of her early retirement under her entitlement, a penalty would be imposed. It means that at my retirement her benefits under my earnings record would be less than what they would be had she not elected early retirement benefits under her entitlement.
Our question is this: If I should die before retiring, would my wife's retirement benefits be fixed (except for cost of living adjustments) at the level determined at her early retirement? Or could she still apply for benefits under my earnings record, increasing her benefits to a higher level?
Should we expect any change in level of benefits as described above to be made without any complications? Or is such a change likely to be treated as unusual or complicated and difficult to implement?
A: James Harris, assistant manager of the Social Security office in Roanoke, said your understanding of the situation is correct. And your wife should have no problem collecting benefits to which she is entitled.
You are asking what would happen if you die before you attain the age of 65.
If your wife is under the age of 65 at the time of your death, Harris said, she could receive benefits under her own record until she reaches that age. At the age of 65, he said, she would then receive her full widow's pension.
If she is over the age of 65 when you die, Harris said, she would receive a full widow's benefit.
Price of dinosaur bones
Q: When we lived in Utah, a friend gave my husband a box of what he said were dinosaur bones. Do you know anyone in this area who could identify them for sure and tell me what they are worth? The news reported recently that some dinosaur eggs and bones were being sold in London. I think it was for high prices.
A: Our local expert is Nick Fraser, adjunct professor of geology at Virginia Tech and curator of vertebrate paleontology for the Virginia Museum of Natural History at Martinsville.
Fraser is willing to talk to you and try to identify your bones. You can reach him through the museum at 1001 Douglas Ave. in Martinsville or by phone there at (703)-666-8642. You could see him there or at Virginia Tech in Blacksburg.
Assuming you have dinosaur bones instead of cattle or deer, the value depends on what you have and how large a collection you possess.
Fraser said it's difficult to put a price on dinosaur bones because, like art, the value is in the eye of the beholder.
Whole dinosaur eggs and complete skeletons command vast sums of money, he said. The value of anything less than that depends on how complete the skeleton is. Museums and collectors are usually willing to pay well for a large accumulation of dinosaur bones in good condition.
But Fraser said many dealers near national parks in Utah sell collections of small bone fragments as souvenirs for about $5 a box.
Mag Poff will help find answers to your personal finance questions. Send them to her at the Roanoke Times & World-News, P.O. Box 2491, Roanoke 24010.
by CNB