Page 12 THE MALDEN ADVOCATE–Friday, December 9, 2022 For Advertising with Results, call The Advocate Newspapers at 617-387-2200 or Info@advocatenews.net Former Malden firefighter sentenced after pleading guilty to federal drug distribution charges COST BASIS OF INHERITED PROPERTY T he cost basis of property acquired from a decedent is equal to the fair market value of such property at the time of the decedent’s death. This is pursuant to Internal Revenue Code (IRC) Section 1014(a) (1). This is referred to as the step up in cost basis. If real estate valued at $500,000 is devised pursuant to an individual’s Last Will and Testament or pursuant to the terms of a living Trust, the recipient of this real estate receives the benefi t of a cost basis equal to the $500,000. It's a new starting point. It’s as if the benefi ciary of the Will or Trust paid $500,000 for the real estate. If the real estate is sold shortly thereafter for $500,000, no capital gains tax will have to be paid. If the property were sold two years later for $600,000, the capital gain to be reported would only be $100,000. It is therefore very important to take into consideration the value of this step up in cost basis when creating an estate plan. Capital gains taxes can be as high as 23.8% federal and 5% Mass. With the new Millionaires tax in Massachusetts, some capital gains could be taxed at an additional 4% rate. Once taxable income exceeds $1,000,000, the excess income is taxed at a rate of 9%. The capital gain could actually push you over the $1,000,000 of income. Consequently, it is even more important to take advantage of the step up in cost basis in order to eliminate or minimize the actual capital gain itself. If appreciated real estate or stocks are simply given to your children outright, the cost basis in the hands of your children would be your cost basis. This is referred to as a carryover basis. You would look to what you originally paid for the real estate or stock, improvements to the real estate, depreciation taken if rental property, etc., in order to determine cost basis. Outright gifts like this do not make much sense in the vast majority of cases. It would be better to place the property in a living Trust in order to avoid probate, obtain the step up in cost basis, provide for estate tax savings and possibly protect against a nursing home if that is one of the objectives. Generally, the capital gains tax savings to the children upon a future sale of appreciated real estate or stock far outweighs the negative of having to pay a Massachusetts estate tax due to the real estate and stock being included in the decedent’s taxable estate. As an example, a $5,500,000 taxable estate consisting of appreciated real estate and stock would cost approximately $460,000 in Massachusetts estate taxes. If the original cost basis of the real estate was only $500,000 because the property was purchased 50 years ago and/or fully depreciated (if rental property), the capital gains tax savings would approximate $1.425million. The net savings to the children would be $965,000. There would be no federal estate tax as the current federal exemption is over $12million. Keep in mind that under IRC Section 1223(9), the holding period for assets received from a decedent shall be considered to be more than one year, even though the assets may have been sold by the beneficiary within one year from the date of death. Pursuant to IRC Section 1223(2), the holding period of the person making an outright gift plus the holding period of the recipient of the gift is added together in order to determine if a short-term (less than one year) or long-term (more than one year) capital gain would be recognized upon a subsequent sale. Joseph D. Cataldo is an estate planning/elder law attorney, Certifi ed Public Accountant, Certifi ed Financial Planner, AICPA Personal Financial Specialist and holds a master’s degree in taxation. O Advocate Staff Report n Dec. 6, 2022, a former Malden fi refi ghter was sentenced in federal court in Boston for conspiring to distribute controlled substances, including oxycodone, suboxone, Klonopin and Adderall. Joshua Eisnor, 43, of North Reading, was sentenced by U.S. District Court Judge Leo T. Sorokin to five years of probation. Eisnor was also ordered to pay a $2,000 fi ne and forfeiture of $900. On June 23, 2022, Eisnor pleaded guilty to one count of conspiracy to distribute and to possess with intent to distribute controlled substances. While working as a fi refi ghter at the Malden Fire Department, Eisnor distributed controlled substances to other members of the Department. “Mr. Eisnor compromised the integrity, security and operations of the Malden Fire Department by distributing controlled substances. As a fi refi ghter, Mr. GRANT | FROM PAGE 3 Axon body-worn camera program, the Malden Police Department and the City are prioritizing transparency and accountability while keeping our community and our police offi cers safe – and we are proud to continue to support these eff orts in the legislature.” Eisnor was responsible for protecting the Malden community. Instead, he dishonored his noble profession and sold drugs while on duty,” said U.S. Attorney Rachael S. Rollins. “His conduct also jeopardized the safety of his fellow fi remen and women who – like the overwhelming majority of public servants – do their jobs with honor, dignity and controlled substance free.” “It is dishonorable for a fi refighter to break the law and breach the trust of his community that he took an oath to protect, but that is exactly what Joshua Eisnor did while dealing drugs on duty to his fellow fi refi ghters, putting them, and the citizens of Malden, in potential danger,” said the Special Agent in Charge of the FBI’s Boston Division, Joseph R. Bonavolonta. “This case illustrates the FBI’s commitment to bringing to justice those who deliberately compromise the integrity of their position for their addictions.” “We are grateful to our Legislative Delegation and the Executive Offi ce of Public Safety and Security for this crucial funding,” said Mayor Gary Christenson. “Having rolled out our bodyworn camera program in October, we are already seeing positive results as our offi cers continue their hard work of protecting our residents.” “Prescription drugs off ered illegally have no guarantees of safety or effi cacy and hold the potential to harm those who use them,” said the Special Agent in Charge of the FDA’s Office of Criminal Investigations’ New York Field Offi ce, Fernando McMillan. “We will continue to investigate and bring to justice those who put the health of the public at risk.” This case announcement was made by U.S. Attorney Rollins, FBI SAC Bonavolonta, FSA-CI SAC McMillan and the Special Agent in Charge of the Department of Veterans Aff airs Offi ce of Inspector General’s Northeast Field Offi ce, Christopher F. Algieri. Special assistance was provided by the Merrimack Valley Transnational Organized Crime Task Force. Assistant U.S. Attorneys Eugenia M. Carris, Deputy Chief of Rollins’ Public Corruption & Special Prosecutions Unit, and Howard Locker of Rollins’ Health Care Fraud Unit prosecuted the case. “The Malden Police Department is truly appreciative of the eff orts made by our Legislative Delegation and EOPSS to assist us with our Body-Worn Camera (BWC) program,” said Police Chief Glenn Cronin. “BWC’s have bolstered our continuing eff ort and commitment to increase transparency, legitimacy, and trust within our community.”
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