Inherited Stock

See: Gifted Equity. Same idea.

Grandpappy died with a million shares of Walmart, for which he paid a dollar a share. He left them all to you. They're trading at $100 a share today. You inherit the shares, but you also inherit the basis. That is, if you ever go to sell them at, say $110 a share, if and/or when they get there, you'll pay tax on a long-term gain of $109, not a gain of $10, i.e., waaaaay more tax than had the tax basis been stamped at the $100 price the day Grandpappy ran his Ferrari into the wall at 180 mph, with Led Zep blaring.