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While I suspect that the answer to my question is "no," I want to be sure. My wife has inherited some stock, some of which was purchased in the '50s and '60s by her grandmother, and which for arcane legal/trust reasons we are required to keep at the original cost basis. This contrasts with the usual inheritance scenario, in which inheritors of a stock are allowed to update the cost basis of that stock to reflect its actual value at the time of inheritance. Because we have to keep the original, extremely low cost basis on this stock, selling it - even simply to shift it to another investment (never mind deriving income on it, which we don't want to do) entails paying a high amount of tax.

So it occurred to me that if we were able to take, say, $2000 worth of one of these stocks and shift it directly AS stock shares into our IRAs, counting that as our annual contribution, we might be able to avoid having to sell the shares, and thus avoid the big tax bite. Then, once the stock shares were safely ensconced within the IRA, we would have the freedom to re-apportion the assets as we liked (i.e. to trade these stocks for others) - again, without having to worry about capital gains taxes. In effect, we would simply cease having to worry at all about the cost basis of the stocks, once inside the IRA.

If this direct stock contribution idea is viable, my wife and I would like to use it every year over many years, ideally until all the low cost-basis stock we have inherited is transferred into our IRAs. At the same time, we could contribute $2000 cash per year into the ordinary brokerage account from which the low-cost-basis stocks are transferred, in order to replace those stocks with others having a more reasonable, contemporary cost basis.

However, it seems to me that in the literature I read about IRAs, the only scenario treated is one in which a salary-earner contributes cash from earned income into the IRA. This makes me suspect that my direct-stock contribution idea is a non-starter.

So is it a non-starter? Or is it the brilliant idea I originally thought it was, before all these doubts started creeping in? Moreover, if direct stock contributions can't be made to an IRA, can they be made to, say, a child's education IRA or some other tax-protected vehicle?

Any hints, suggestions or answers to these questions will be appreciated.

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