The Short Answer

In most estates, stock sales are reported under the estate’s tax identity (often the estate EIN) and the taxable capital gain is generally based on the difference between the sale proceeds and the estate’s tax basis in the shares (often tied to date-of-death value). The executor also has to make sure the brokerage reporting (such as Forms 1099) matches the correct taxpayer (the estate vs. an individual) and that the estate has the legal authority to sell and transfer the securities.

What Pennsylvania Law Says

Under Pennsylvania probate law, a personal representative (executor/administrator) generally has authority to sell estate personal property as part of administration unless the will restricts it. Separately, Pennsylvania law also places practical compliance requirements on brokers and similar entities before they will transfer securities standing in a decedent’s name, including inheritance-tax related conditions that can affect timing and paperwork.

The Statute

The primary law governing an executor’s authority to sell estate personal property is 20 Pa.C.S. § 3351.

This statute establishes that, unless the will provides otherwise, the personal representative may sell estate personal property (which typically includes publicly traded stocks) as part of administering the estate.

In addition, brokers and similar entities may require inheritance-tax related proof or reporting before transferring securities, which can affect how quickly an estate can retitle an account or complete sales. See 20 Pa.C.S. § 6411.

Why You Should Speak with an Attorney

Even when the general rule is straightforward (sale proceeds minus basis equals gain), estate stock sales get complicated quickly because the “right” taxpayer, basis, and reporting can change the outcome and create IRS notices if the documents don’t line up. Legal outcomes often depend on:

• Strict Deadlines: Estate administration and tax filing timelines can collide with brokerage processing delays (retitling accounts, obtaining tax waivers/consents, and getting corrected tax forms). Missing a filing deadline or filing under the wrong taxpayer can create penalties and expensive cleanup work.
• Burden of Proof: If the IRS questions the reported gain, the estate may need documentation supporting the valuation/basis and the authority for the estate to transact (letters testamentary/administration, account statements, confirmations, and brokerage reporting under the correct TIN).
• Exceptions: Whether the sale is properly reported on an estate fiduciary return, a beneficiary return, or partly allocated can depend on how the account was titled, whether assets passed outside probate, and what the governing instrument requires—issues that are easy to miss when you’re trying to file quickly.

Because you’re dealing with (1) securities that may still be titled in the decedent’s name, (2) possible additional tax documents under the estate EIN, and (3) time pressure to e-file before the system closes, it’s worth getting legal guidance so the estate’s administration steps and tax reporting are consistent and defensible.

If you want more background on adjacent issues, you may find these helpful: How can an executor get an estate EIN in Pennsylvania? and Do I have to file an estate tax return in Pennsylvania if the estate made no distributions?.

Get Connected with a Pennsylvania Attorney

Do not leave your legal outcome to chance. We can connect you with a pre-screened Probate attorney in Pennsylvania to discuss your specific facts and options.

Find a Pennsylvania Attorney Now

Disclaimer: This article provides general information under Pennsylvania law and does not create an attorney-client relationship. Laws change frequently. For legal advice specific to your situation, please consult with a licensed attorney.