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Author: uhclem One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121144  
Subject: Re: Kiddie Tax Question Date: 2/4/2000 11:18 AM
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Phil:

Thanks for your reply. Let me see if I can clarify the strategy and remain within the bounds of legal tax avoidance (as opposed to tax fraud).

I have an infant. I create an UGMA account for the infant. I make a gift of X shares of stock (value below $10K) to the infant. I sell some (or all) of those shares. The capital gain from the sale (using my original basis) is less than $700.

Result: gain is not taxed by feds.

Obviously, this is a small amount of money, but any tax I can legally avoid helps pay for diapers and formula.
Is this strategy sound?

Thanks again for your advice!

Jon
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