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Hello,

An elderly,wealthy relative plans to give my wife “$10,000" in General Electric stock before the end of the year. (She is slowly reducing her estate).

She wants to know us to tell her how she can do this (or how we want it done). For example, do we want to set up a broker account with her broker (Schwab)and then have the stock transfered to her, or do we simply ask her to liquidate it and receive the cash?

In any event, I'm worried about the tax consequences of my wife receiving the stock and then liquidating it herself some time later.

How do you think we should ask for this stock? I welcome any thoughts or suggestions.

Thanks.
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If I recall, if the gift is less than $11,000.00 (in kind or money), there will be no taxes.

Donna
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If I recall, if the gift is less than $11,000.00 (in kind or money), there will be no taxes.


If she sells the stock and gifts cash she will still have to pay for capital gains.
On the other hand, if the gifts the stock by transferring it to your brokerage account (if that is possible) does she have to pay capital gains ? What will be the cost-basis for the stocks that you will receive.
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In any event, I'm worried about the tax consequences of my wife receiving the stock and then liquidating it herself some time later.

That would be a valid concern. If you receive the shares of stock directly, you will take over the elderly relative's cost basis in the stock. When you sell, you would have to pay tax on any gain she had in the stock.

Things would be easier for you if the relative sold the stock and gave you cash. However, then they would have to pay the tax on the gain.

In your shoes, I'd graciously accept the shares of stock, and politely ask for her tax basis. I'd explain that you need to know the basis so that you can properly report the sale of the stock if you ever decide to sell it.

Then I'd write a nice "thank you" letter once it's all done.

The easiest transfer would be to set up an account with the same brokerage she is using. Then she can instruct the broker to transfer the stock into your account. If you want to sell, then you can do so. If you wanted to use a different brokerage, it is much easier to move the stock between accounts at different brokers that are both in your own name.

--Peter
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Thanks. Your advice is excellent.

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