RetireJapan

A elderly family member has a particular large pile of TEPCO stock.

Of course / unfortunately; this stock remains at a gargantuan loss versus what he paid pre-3/11 for this massive, mistaken investment.

Meanwhile our private portfolio consists of mainly Emaxis Slim Products which we buy monthly both on NISA and taxable accounts. We do not intend to sell for 30+ years, when we will (hopefully) face major capital gains taxes on those funds we have purchased beyond NISA and IDECO limits.

Assuming we inherit the TEPCO stock and pay the inheritance tax on the spot value at that time, would we be able to deduct the original TEPCO loses from our Emaxis Slim profits to offset most of the tax due on these profits, or would the tax authority view the stocks purchase price as the spot price we paid the inheritance tax on; rather than the price paid by the family member some 20+ years ago?

As I understand in Japan we assume debts/liabilities of the deceased, but in this case there might be some upside to this one?

Appreciate any thoughts or insight. Obviously not urgent but an interesting one to try and figure out.

smalldog wrote: ↑Tue Aug 01, 2023 12:41 am A elderly family member has a particular large pile of TEPCO stock.

Of course / unfortunately; this stock remains at a gargantuan loss versus what he paid pre-3/11 for this massive, mistaken investment.

Meanwhile our private portfolio consists of mainly Emaxis Slim Products which we buy monthly both on NISA and taxable accounts. We do not intend to sell for 30+ years, when we will (hopefully) face major capital gains taxes on those funds we have purchased beyond NISA and IDECO limits.

Assuming we inherit the TEPCO stock and pay the inheritance tax on the spot value at that time, would we be able to deduct the original TEPCO loses from our Emaxis Slim profits to offset most of the tax due on these profits, or would the tax authority view the stocks purchase price as the spot price we paid the inheritance tax on; rather than the price paid by the family member some 20+ years ago?

As I understand in Japan we assume debts/liabilities of the deceased, but in this case there might be some upside to this one?

Appreciate any thoughts or insight. Obviously not urgent but an interesting one to try and figure out.

Edit -

贈与により取得した株式の取得費は、どのように計算しますか？
贈与者の取得費を引き継ぎます。贈与した日の時価ではありません...

How is the acquisition cost of stock acquired by gift calculated?
The donor's acquisition cost is taken over. It is not the market value on the date of the gift...

https://faq.nomura.co.jp/app/answers/de ... %EF%BC%9F

As far as I know, if you are resident in Japan then you inherit "property" (which includes stocks) at the price the deceased paid for it. So yes, if you sold it after you inherited it then you could indeed offset the losses against other profits in that tax year.

northSaver wrote: ↑Tue Aug 01, 2023 1:03 am...offset the losses against other profits in that tax year.

If it's all domestic (other gains, etc), isn't a loss usable for three years?

TokyoBoglehead wrote: ↑Tue Aug 01, 2023 12:50 am
贈与により取得した株式の取得費は、どのように計算しますか？
贈与者の取得費を引き継ぎます。贈与した日の時価ではありません...

How is the acquisition cost of stock acquired by gift calculated?
The donor's acquisition cost is taken over. It is not the market value on the date of the gift...

https://faq.nomura.co.jp/app/answers/de ... %EF%BC%9F

The answer remains the same, but it seems you've referenced gift tax rather than inheritance tax. Here is the same site’s link for inheritance tax.

JohKun wrote: ↑Tue Aug 01, 2023 10:33 am

northSaver wrote: ↑Tue Aug 01, 2023 1:03 am As far as I know, if you are resident in Japan then you inherit "property" (which includes stocks) at the price the deceased paid for it. So yes, if you sold it after you inherited it then you could indeed offset the losses against other profits in that tax year.

In that case, you’d be able to utilize the loss at some point, but potentially get a huge inheritance tax bill for the asset valued original purchase cost….I’d calculate carefully and preferably have the stocks sold….

Inheritance tax and income tax (including capital gains) are two different animals. Inheritance tax is based on the value of the inherited assets at the time of the decedent's death, pure and simple (or that's what I'd like to say if I didn't know that inheritance can be a complicated matter). Capital gains are based on comparing acquisition price to liquidation price, and in the case of inherited assets, that means the acquisition price paid by the decedent. Inheritance tax is reported on an inheritance-tax return (sōzokuzei shinkoku); you have 10 months to file such a return if one is due. Capital gains are reported on a kakutei shinkoku, and as far as I can tell, once the stocks have been transferred to your name (which happens as part of the inheritance process), you can treat them as you would any other stocks you own, with the exception that the acquisition price is the one paid by the original purchaser. (You separately have to file a jun-kakutei shinkoku for the decedent within four months of death.)

Thanks for your input on this one gents - seems there might be a useful tax management tool here then. Shall let you know in the year 2055 how it goes practically.

I hope RetireJapan will still be rocking the same classic interface then.

smalldog wrote: ↑Tue Aug 08, 2023 2:55 am Thanks for your input on this one gents - seems there might be a useful tax management tool here then. Shall let you know in the year 2055 how it goes practically.

I hope RetireJapan will still be rocking the same classic interface then.

(I have no idea how to actually run this forum)