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I understand that when you do stock gifting you transfer the cost basis of the stock to the donee (your family member who has lower tax bracket) to take the advantage of their lower tax bracket. Does this rule apply to all kind of stocks including company Incentive Stock Option's stock? I mean these ISO stocks are over two years from grant date and over 1 year from exercise date.

For example, if I execise the stock 2 year ago at $1 per share and the FMV on that date was $1 too. And I then transfer the stock to my brother last week and he sold the stock at $5 per share. Do I need to pay any tax?


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