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Financial Planning / Tax Strategies


Subject:  Re: Gifting appreciated stock and capital gains Date:  12/19/2012  6:49 AM
Author:  rstmnum Number:  117156 of 130843

Thank you so much for clarifying and correcting my misconception (ignorance)!

One more question in this context.

I presume that the recipient will have to pay the capital gains tax at his/her own rate? That would leave an opportunity if the recipient is in a substantially lower tax bracket than the donor.

The scenario is this. I want to give 10,000 $ to an adult child who is a grad student and not a dependent. I can give cash, or can give 10,000 $ of appreciated stock. (even though we currently have a nominal federal 15% capital gains tax rate, when I realize a capital gain fully it always comes out to be about 30 cents on the dollar after all state taxes and other downstream effects the gain has on AGI).

The kid has no income, and therefore would not owe any capital gains tax on the sale of the transferred stock either, if even though he assumes my cost basis.

Is there something in this scenario that I am missing?

Thank you again for your kind help!
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