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11K can be given to any person annually without any tax reporting. The value is market value and not the cost basis.

If you are married that means that both you and your wife could transfer 11K to the child.

A gift retains its cost basis and original purchase date. If you give stock make certain that you give the documents for the cost basis. It makes her taxes alot easier. When the stock is sold the capital gains will be taxed at her tax rate. If she is unemployed at the time of sale her tax rate is probably very low.

If you exceed the $11K limit, then you need to report the gift. The amount would probably not be immediately taxed. It reduces the amount of your estate that is free from estate tax.

Currently, inheriting appreciated stock is better for taxes (providing no estate tax is due). The stock receives a cost basis based on its value on the date of death. In the future, during the year that estate tax is eliminated, inherited asset may retain their cost basis. I do not have a complete understanding of the pending changes. It sounds like you are giving her a gift because of unemployment but if you are doing more elaborate estate planning professional advise by someone who knows your state laws is good.

Debra

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