A viral call to Dave Ramsey’s show reveals the tax trap hiding inside every family’s “lucky stock” story.
A caller named Seth, 52, told Dave Ramsey his 84-year-old father bought 1,000 shares at $22 each years ago. Those shares are now worth over $1,000 apiece – a $22,000 bet that grew into roughly $1 million.
Key Details
The father, now in memory care with Alzheimer’s, holds an estate worth close to $5 million, including an $800,000 to $900,000 IRA and two Morgan Stanley accounts. Selling the stock position today would trigger an estimated $150,000 in capital gains tax. Waiting until after his death lets the family use a step-up in basis, which resets the cost basis to the stock’s value on the date of death, wiping out most or all of that tax bill.
Seth floated a middle path: selling 20% to 25% of the position now, about $200,000 worth, for a smaller tax hit of $30,000 to $40,000, while keeping the rest for the future step-up.
Why It Matters
The stock in question is Microsoft, up roughly 704% over the past decade but down about 20% over the past year, near $399 after peaking above $551. It’s a reminder that even blue-chip winners carry real drawdown risk, and concentration can erode a fortune just as fast as it built one.
The right move depends on risk tolerance, life expectancy, and tax bracket – best worked out with a CPA and estate attorney before anyone sells a share.
Stay ahead of every market-moving headline with QuoMarkets.
Source: Yahoo Finance
