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Financial Planning / Tax Strategies


Subject:  Re: Gifting appreciated stock and capital gains Date:  12/19/2012  6:57 AM
Author:  TMFPMarti Number:  117157 of 130895

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?

Possibly Kiddie Tax, which is not restricted to dependent children. See Pub 929.

Speaking of dependents, if he doesn't qualify as yours, who's supporting him?

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