I’ve got a large amount of highly appreciated shares that were acquired through my work ESPP and while I was married and in a community property state. I am now retired and need to diversify (slowly). I have these shares in a non-IRA, individual brokerage account in my name. I am 10 years older than my wife and have a heart history (CABG) so I think it is likely I would die before her.
I am expecting that these shares would get a step up in basis on my death. Since this is community property (I think), so independent of share/account owner, would only 1/2 of the shares get a step up in basis on my death?
If so and given I am going to sell the shares to diversify (over multiple years), can I sell shares from “her” 1/2 so that there is more of my 1/2 shares when I die (which would get the step up in basis)? If so what would be the steps necessary to separate and/or document “her” shares and sales? (I am assuming we are still filing a joint return.)
I am going to answer my own question after some more research … in case somebody else stumbles across this question.
My assumption about only 1/2 of the shares getting the step up in basis was wrong. There are quite a few articles out there stating under US tax code that community property (i.e. property acquired in community property state), in this case stock shares, would ALL get the step up in basis. Non-community property would only get a 1/2 of the shares stepped up.