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irasmilo:

<<<<When I was a child and recieving an allowance my parents used the money to purchase stock for me. They put it in their name. This year they transferred it into my name.

I really want to sell this stock, but I'm wondering what my "real" basis is. Is it my allowance, or since they put it in their name, is it the fair market value as of the date I received it, or something else?>>>>

"As always, it depends. <g> In general, your cost basis will be the same as your parents' cost when they purchased the stock. However, if the stock was worth less on the day they transfered it to you than their cost, you need to keep track of both amounts. In this case, any gain will be calculated from the market value on the transfer date, and any loss will be calculated from their purchase price. You must look at each purchase of stock independently of the others.

Second, if the value of the stock was more than $11,000 on the transfer date ($22,000 if the stock had been purchased in both your parents' names), your parents will have to file a gift tax return declaring the gift. Generally, they won't owe any gift tax at this time, but if they do, the tax paid is an adjustment to your cost basis in the stock.

Finally, don't forget to thank your parents for their foresight in making you invest your allowance and not spend it all as soon as you earned it."

Ira or any of the other tax pros: Any chance that the "put it in their name" was simply a nominee holding title, but not equitable interest, for a minor child, so that the change of name from parents to OP is only a change of record owner, but no change in real owner, and thus not a taxable event?

I doubt that conversion of UGMA or UTMA accounts to the now majority age child trigger a taxable event.

Regards, JAFO


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