What are the tax implications of a mutual fund held jointly by mother and son at the mother's death?

When you say jointly owned, I am assuming 50/50 ownership. The son's half of the mutual fund would not change. Whoever inherits the mother's half would receive a step-up (or step-down) in basis to the Fair Market Value of the mother's half at the date of her death.

Example: Let's just say the Mutual Fund cost $5,000, with the mother having $2,500 of it and the son having $2,500 of it. If the FMV of the Mutual Fund on the date of the mother's death is $6,000, the new basis of the mother's portion is $3,000, while the son's portion still has a basis of $2,500. If it was the son that inherited the mother's half, then he would have a total cost-basis of $5,500 instead of $5,000. When the mutual fund is sold, the new cost-basis would be used to determin the gain/loss, and the date acquired would change to the mother's date of death. Even if the mutual fund is sold within one year of the mother's date of death, the gain/loss would still be treated as long-term. Hope this helps.

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