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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120809  
Subject: Re: Stock Transfer Date: 5/11/2005 12:12 PM
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My mom (71 years old and retired) is interested in transfering common stock to a family friend in exchange for some carpentry services.

She wants to do this to avoid paying capital gains tax on the money. I'm sure that this is either illegal or some other tax would apply, or the family friend would have to pay gains tax when he sold the shares.

Can anyone give me or point me in the direction of some info where I can research this?


It's really a form of barter, and there's nothing illegal about it. The value of the stock would be business income to the carpenter.

Off the top of my head it seems to me that the difference between her basis in the stock and its current value would be ordinary income to your mother (services received without paying for them). Thus, she'd pay a higher rate of tax than she would if she sold the stock and paid the carpenter in cash.

Sounds like a plan to me, but not a very good one. Mom needs a hobby other than trying to dream up ways to avoid tax.

Phil
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