A person died. Some shares of stock owned by the deceased were never claimed by the beneficiary. The State of Illinois obtained these shares of stock, because it was determined to be “Unclaimed Property”, and after a few years sold the shares. The beneficiary became aware of these funds, contacted the State of Illinois and received the cash held by the State of Illinois. The State of Illinois does not send any tax forms to anyone, neither the IRS nor the beneficiary.

Should the cash received be reported as taxable income?   Ordinary income or capital gains? Should an attempt be made to calculate the cost basis and resulting capital gain and dividend income that was received by the State of Illinois over the years?

Glenn Z