Qualified dividends on a newly inherited account

[archer]

When inheriting funds in a taxable account, the cost basis for the assets held therein are reset. So, does the heir need to wait the prescribed holding period for subsequent dividends to become qualified in order to be taxed at capital gains rates as if they newly funded the account?

Thanks

[fishingrod]

On inheritances your holding period is automatically considered to be more than one year. So, when you sell the inherited stock, it’s subject to long-term capital treatment. This applies regardless of the actual holding period. I would assume that it applies to holding period for qualified dividends also. Good question.

[archer]

Nov 23, 2022 10:30:33 GMT fishingrod said:

On inheritances your holding period is automatically considered to be more than one year. So, when you sell the inherited stock, it’s subject to long-term capital treatment. This applies regardless of the actual holding period. I would assume that it applies to holding period for qualified dividends also. Good question.

Thanks! That was helpful. Given that the holding period is automatically considered to be more than a year, it allows for lower rate capital gains rates on immediate sells. This gives time for future divs to meet the holding period.