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I looked in the FAQ's for an answer to this question, and was not able to find it in detail. My question is thus:

I was gifted 180 Shares of SBC. The date that they were gifted to me, they were worth, lets say $50 to be simple. When I sell, what are the tax implications?

1. What is the cost basis? Is it the cost when gifetd to me or the cost when originally purchased?

2. Is the holding period from when I get the gift, or when Grandma bought them?

Thanks for your help.
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"I looked in the FAQ's for an answer to this question, and was not able to find it in detail."

Try looking there again. The section titled "Gifts of Stock" goes through this exactly.

"I was gifted 180 Shares of SBC. The date that they were gifted to me, they were worth, lets say $50 to be simple. When I
sell, what are the tax implications?

1. What is the cost basis? Is it the cost when gifetd to me or the cost when originally purchased?

2. Is the holding period from when I get the gift, or when Grandma bought them? "

The basis and holding period are from when she bought them, though the limit of $10k to have gifts not taxed is from when you are given the gift. You didn't give all the info, but lets say she bought them at $40.share over a year ago. Then if you sold at $50 you would have your "profit" of $1800 taxed as long term capital gains....20% if you aren't in the 15% tax bracket.

Try reading through that section in the tax FAQ. It's in the Children/Inheritance subsection....and there is another file or 2 in there you should read too.

Fool On

Aaron
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The basis and holding period are from when she bought them, though the limit of $10k to have gifts
not taxed is from when you are given the gift. You didn't give all the info, but lets say she bought
them at $40.share over a year ago. Then if you sold at $50 you would have your "profit" of $1800
taxed as long term capital gains....20% if you aren't in the 15% tax bracket.

What if she bought them the day before they were gifted? Then am I in the "Short Term Gains" boat since they would be held under a year if I sold now.
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Ringfinger writes:

What if she bought them the day before they were gifted? Then am I in the "Short Term Gains" boat since they would be held under a year if I sold now.

I reply:

Yep, that's how it works. You get the giftor's holding period. By the way, the basis rules for gifts change (unfavorably) if you're selling at a loss. On the other hand, if the you had inherited the stock rather than receiving it as a gift, you would have been entitled to a "stepped up basis" -- the value at death, or six months after death (depending on the executor's election). --Bob
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Per U.S. Master Tax Guide-
1630. Property Acquired by Gift. If property was acquired by gift after 1920, the basis to the donee is the same as it would be in the hands of the donor or the last preceding owner by whom it was not acquired by gift. The basis for loss is the basis so determined (adjusted for the period prior to the date of the gift as provided in P1611-P1617)or the fair market value of the property at the time of the gift, whichever is lower.

Clear as mud, eh?

Your cost basis is Grandma's cost basis, not price at time of gift.

The Tax Guide again-
1777. Rule on Determination of Holding Period-Per May 7, 1997. For tax years ending before May 7, 1997, the required holding period for the treatment of of gain or loss on the sale or exchange of a capital asset as long-term capital gain or loss is "more than one year".

I just noticed that I'm using my 1998 U.S. Master Tax Guide, and cannot, for the life of me, find the 1999 edition. It's here somewhere, but that don't mean I'm gonna find it soon...

If you just gotta know right away, check out your library. Ask them for the CCH "1999 U.S. Master Tax Guide". Check the Topical Index for "Holding period...gift property". You can get the up-to-the-minute answer that way.

Sorry about that.
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I get Grandma's holding period and cost basis. I understand now. Thank you for your help.
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