Tax implication on inherited stock sold?

My mother-in-law filed a claim with the NYS Comptroller, Office of Unclaimed Funds, because there were 68 shares of stock that was reported to them on behalf of her deceased father that they were in possession of. After determining that she was the only remaining living heir to her father's estate (he died in 1973), she instructed the state to sell the shares of stock (rather than having them transferred to her), and send her the proceeds of the sale. She received a check in the amount of $4000. Is this money considered to be income of which she has to pay taxes?

She would have capital gain on the difference between the 4,000 she received and the value of the stock on the date of her father's death (yahoo and motley fool both have historical stock price sections that she can use to establish the value on the stock on the date of his death). It would be long-term capital gain, which would be taxed at 15% maximum tax rate (5% for those in 10 or 15% bracket).

Yes...sort of. She has to report the GAIN on the sale. The basis (or cost) of the stock will be whatever it was worth on the date of her fathers death, which may be difficult to determine since its been over 30 years. The OUF might have that on record but it too is unlikely.
Anyway, her taxable income is the 4000 less whatever her basis is. Consult a Tax Professional for further details. A broker might be able to help with the basis number too.

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