My father died recently, and his will appointed me as executor. When the State Examiner and I went to his safe-deposit box, we found a stock certificate for five shares of Berkshire Hathaway stock that were dated in 1981. We also found an envelope with paper dollars worth almost $20,000. The examiner said that these items would be taxed under the inheritance tax. He further raised a question as to whether income tax had been paid on the value of these items or on the Berkshire dividends. My mother knew nothing at all about any of this. She assured me that all dividends reported on 1099s were included on their joint income-tax returns. We found the broker's bill for the stock, but there was no indication of how it was paid. The broker is no longer in business, and its successor had no records that far back. Where the cash came from, we have no idea. Dad worked for a salary all his life in a capacity where he had no access to money or valuables. What do we do?
What Harry says: There is no question about these assets being subject to the inheritance tax. The income tax is another question. The payment for the stock and the cash could very well be the result of squirreling away money over a lot of years. I see absolutely no reason to invite an IRS examination. Berkshire Hathaway stock paid no dividends during the period of his ownership, and there's no indication that these assets were acquired with money that was not previously taxed. I'm sure your mother can put these items to good use.
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