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The Pocket Idiot's Guide™ To Direct Stock Investing by Lita Epstein, Douglas Gerlach

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Tax Strategies

You may also decide to use other tax strategies, such as leaving stock to your heirs or simplifying your capital gains calculations.
Suppose you decide that you want to leave your stock to your grandchildren and never sell it while you are alive. If you never sold your DRIP stocks during your life, the DRIP shares would be left to your heirs as part of your estate.
The market value for all the shares will be stepped up to their value on the date of your death (or as of the date six months following your death). The decision on the timing for the stepped up price will be made by the person administering your estate. This eliminates the need to establish the historical cost basis of DRIP shares.
If you sell your DRIP or DSP shares, ...

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