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Gather Investment, Cryptocurrency & Business Records
Taxes & Financial Filings
Collect all investment, brokerage, cryptocurrency, partnership, and business records reflecting income, gains, losses, or ownership activity during the year of death. This includes traditional investment accounts as well as digital asset platforms and self-directed retirement accounts. Accurate documentation of sales, transfers, staking activity, or business income is essential to properly report capital gains, losses, and taxable events. Given the complexity of investment and cryptocurrency reporting, consider consulting a licensed CPA or tax professional to ensure proper treatment. AfterMatters provides organizational guidance only and does not offer tax or legal advice.
Frequently Asked Questions
Documents
What brokerage and investment documents do I need?
Gather year-end account statements from all brokerage firms, showing positions and values. Request a date-of-death valuation from each firm—this establishes the stepped-up cost basis for inherited assets. Collect Form 1099-B (proceeds from sales), 1099-DIV (dividends), and 1099-INT (interest). If the deceased sold investments during the year of death, you will need original cost basis records to calculate gains/losses on the final return.
What about K-1 forms from partnerships or businesses?
If the deceased was a partner in a partnership, member of an LLC, or shareholder in an S-corporation, the entity will issue a Schedule K-1 showing their share of income, deductions, and credits. The final K-1 covers January 1 through the date of death. Contact the business or its accountant to ensure the K-1 is prepared correctly for the shortened period. K-1 income must be reported on both the final personal return and potentially the estate return.
Costs
What is cost basis and why does it matter for inherited assets?
Cost basis is the original purchase price of an asset, used to calculate capital gains when sold. Inherited assets receive a "stepped-up" cost basis equal to the fair market value on the date of death. This means if the deceased bought stock for $10,000 and it was worth $50,000 at death, the beneficiary's basis is $50,000—eliminating $40,000 in taxable gains. Documenting the date-of-death value for every asset is essential and can save beneficiaries significant taxes.
Digital
How do I report cryptocurrency transactions on the tax return?
Cryptocurrency transactions are reported on Form 8949 and Schedule D, similar to stock sales. Each transaction (sale, exchange, or use for purchases) is a taxable event. You need records of every transaction: date acquired, date sold/exchanged, proceeds, and cost basis. Major exchanges (Coinbase, Kraken) provide transaction history downloads. For DeFi and staking activity, specialized crypto tax software (CoinTracker, Koinly, TaxBit) may be necessary. A CPA experienced with digital assets is strongly recommended.