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Author: greerkw Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Income shifting Date: 9/28/2000 2:05 PM
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This is my first post to the tax strategies board. I hope that someone can tell me if the following income shifting stratgey would be OK or if it would somehow raise a red flag at the IRS?

My son is in his sophomore year of college and I need to sell some appreciated stock to pay for his next semester (last year he paid about 40% of the cost from his own savings but that is gone now). Since he is in the 15% tax bracket, can I give him the stock as a gift and then have him sell it and pay his college bills from the proceeds? As I understand, he would still owe capital gains taxes, but at 10% instead of 20% that I would owe. I also know that if the gift is for more than $10,000, I have to look out for gift taxes. Also, I read about a lower capital gains rate of 8% after Jan. 1. If I gave him the stock (which is more than 5 years old), could he sell it after Jan. 1 and only owe 8% capital gains tax?

Any advice or places to look for answers would be welcome.
Thanks,
Keith
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