Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev Thread | Next Thread
Author: MikeSki9117 One star, 50 posts Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121426  
Subject: Transfer in kind Date: 12/26/2013 11:42 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Hi,
If I transfer in kind stock to my children and the value is less than $10,000 is the following correct:
1. They pay no tax on the transfer?
2. The "cost basis" for the stock in the transfer is reset to the value on the day of the transfer?
Thanks
Print the post Back To Top
Author: foo1bar Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 119760 of 121426
Subject: Re: Transfer in kind Date: 12/27/2013 1:19 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
1. They pay no tax on the transfer?
They would not.
And assuming that you only gift $10K to an individual in a year, then you don't have to worry about gift taxes either. (or using part of your unified credit)
(Actually $14K is the limit for 2013)

2. The "cost basis" for the stock in the transfer is reset to the value on the day of the transfer?
If it's a stock that has a gain, no.
If it's a cap. loss - sort of...
http://fairmark.com/capgain/basis/gift.htm


Unless they have a much lower cap gains rate and you have a very appreciated stock, you're probably better off giving them a check.

Print the post Back To Top
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 119762 of 121426
Subject: Re: Transfer in kind Date: 12/27/2013 4:52 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 5
1. They pay no tax on the transfer?

The recipient [almost] never pays tax on the transfer, no matter how large. The giver is the one that might have to pay a gift tax.

2. The "cost basis" for the stock in the transfer is reset to the value on the day of the transfer?

No. For calculating a gain, the recipient steps into your shoes and takes over your tax basis and holding period. For calculating a loss, they use your basis and holding period, unless the Fair Market Value on the date of transfer is less than your basis. In that case, they'd use the FMV instead of your cost.

In other words, someone will have to pay the tax on any gain at the time of the gift. If there is a loss at the time of gift, it will be lost and no one can use the loss. (Moral of that story - don't make a gift of stock that is at a loss. Sell it and give the cash instead.)

--Peter

Print the post Back To Top
Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 119764 of 121426
Subject: Re: Transfer in kind Date: 12/27/2013 11:43 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 5
2. The "cost basis" for the stock in the transfer is reset to the value on the day of the transfer?

What you may have been thinking of is that this is true if you die and someone inherits the stock but that is a tough way to increase the cost basis ;)

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev Thread | Next Thread
Advertisement