Hi Kab, that's a good question. In my dreams of becoming a rich person myself (if NWBO lives up to its potential - and it's beginning to look like it will), I have been doing some reading on estate taxes lately. I will not need all the money I will soon have and I will have to start thinking about establishing trust funds for my 2 daughters - would be a nice problem to have :)
The sweet think about the current tax law is what's called a "step-up" in basis. So if Linda's cost was 0.25, and at the date of the transfer if it was 1.58, then the cost basis for the beneficiary is 1.58. Any future taxable gains will be calculated based on this stepped-up cost basis.
Still, if you expect the stock price to appreciate substantially, then 1.58 would still be a very good cost basis to make the transfer. And yes, the new cost basis of 1.58 would be used for the $3.75M lifetime limit.
Cheers!
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