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Mahul:

Please be aware that when your daughter turns 18, she has access to the funds in her name in her UGMA account. Instead of college, she might decide to buy a car - or donate the funds to the cult she just joined. You might wish to establish an educational trust for her, with the final distribution made to her (should she choose not to attend college) and the earlier of age 80 or her actual maturity. . .

Your gift to her is the fair market value of the gift. For 200 shares of XYZ trading at $100, that gift would be $20,000. The limitation for one individual donor is only $10,000. Both you and your wife should each gift to her 100 shares - or $10,000 for each donor. At that level, you need not file a gift tax return Form 709.

Her basis is the original basis and holding period carried over from you. That basis for XYZ at $50 is only $10,000. After a 2:1 split, her per share basis will be the equivalent $25 (total 400 shares at $25 still being the original $10,000).

You should count your blessings every day for the birth of your child. My baby girls are 25 and 20.

"Your son is your son `til he takes him a wife.
Your daughter is your daughter for the rest of your life."


Congratulations.

Mike
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