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Financial Planning / Tax Strategies


Subject:  Re: Tax consequences of stock gift Date:  4/8/1998  10:06 AM
Author:  TMFTaxes Number:  3331 of 127549

[[In an effort to encourage my brother-in-law and his new wife to begin regular investing, I'm planning
on giving them a few shares of stock as a wedding present along with information on the DRiP plan.
I know he doesn't have to pay taxes on the shares until he sells them (as long as I don't give them
more than $10,000 each), but I'm not sure how I account for the stock gift. Does it count the same
as a sale and I pay the capital gains? When the company makes the stock transfer do they tell me
the current cost for us to use as the cost basis? I've received stock as a gift before but never given it
away, so any help with my fairly naive questions would be appreciated :-)]]

Check out my post in the Taxes FAQ area regarding gifts of stock and the tax consequences applicable to that gift.

In short, neither you nor he has a taxable event when the gift is made. And, as you not, if the gift is under $10k, you have no gift tax issues to deal with.

At the date of the transfer, you'll want to be able to provide the donee with both the FMV of the shares AND your basis in the shares, since this information will be important to him when he finally sells the shares.

So check out my post for a more lengthy discussion of the issues.

TMF Taxes

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