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I gave my children csco which I had held for about 2 years. If I pay the capital gains on this stock from the time i bought it until the day I transferred it to their accouts, is their cost basis that of the day of transfer or does it revert to when I purchased the stock?

thanks for a reply
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gave my children csco which I had held for about 2
years. If I pay the capital gains on this stock from the
time i bought it until the day I transferred it to their
accouts, is their cost basis that of the day of transfer
or does it revert to when I purchased the stock?


You can not pay the capital gains tax if you did not sell the stock. Transferring to your children as a gift is not selling the stock.

If the children purchased the stock from you then you would owe the capital gains tax and the childrens basis would be what they paid for the stock.

As a gift, the childrens basis is what you paid for the stock. I think normaly this is a good deal. I can not think why you would want to pay the tax now unless your taxable income for the year is very very low and you would owe little if any tax after your deductions.
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[[I gave my children csco which I had held for about 2 years.]]

Good for you...

[[ If I pay the capital
gains on this stock from the time i bought it until the day I transferred it to their
accouts, is their cost basis that of the day of transfer or does it revert to when I
purchased the stock?]]

You don't have that choice. Once you gave the stock to them, you lost all control. You don't have the option to consider it "sold" at the date of the transfer. A gift is a gift. So their basis and holding period will be your original basis and holding period.

You can read more about this issue in the Taxes FAQ area. Check it out.

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