OT: Any tax guys around?

[ArmchairTiger]

I have a question about the tax liability on the transfer of long term stock to a family member. If the stock value is less than the allowable yearly tax free gift, do I, as the giver, have to pay capital gains on the shares given or does the recipient bare that burden? Tia

 

[financeNfootball]

Not 100% positive of this, but fairly certain that you - the giver - would not owe any capital gains taxes when gifting stock shares to a family member. The cost basis would transfer to the recipient, and they would incur any capital gain taxes whenever they sold the position. If you're up there in age, it might be better to hold the stock and allow beneficiaries to get a step up in basis upon death. Otherwise, I think the recipient would just have to accept the future tax hit when they sell the gifted stock shares.

 

[ArmchairTiger]

Not 100% positive of this, but fairly certain that you - the giver - would not owe any capital gains taxes when gifting stock shares to a family member. The cost basis would transfer to the recipient, and they would incur any capital gain taxes whenever they sold the position. If you're up there in age, it might be better to hold the stock and allow beneficiaries to get a step up in basis upon death. Otherwise, I think the recipient would just have to accept the future tax hit when they sell the gifted stock shares.

Thanks for the reply. I'm actually giving to my dad. The addition to my AGI if I were to sell would not be advantageous to me under the current health care premium structure.

 

[andcam]

Just cheat and dont worry about it. I think Trump is gonna cut the IRS enforcement drastically, or so he said on the campaign trail.

 

[ATLTigerJNW]

You need to research the "gift tax." You, as the donor, could owe gift tax if the value of the gift exceeds the yearly exemption amount and you do not use your life time exemption amount (approx. 5 million). You would have to file a gift tax return if the gift exceed the yearly exemption amount. The recipient of the stock would take your cost basis and incur the capital gain when they sell.

 

[ArmchairTiger]

You need to research the "gift tax." You, as the donor, could owe gift tax if the value of the gift exceeds the yearly exemption amount and you do not use your life time exemption amount (approx. 5 million). You would have to file a gift tax return if the gift exceed the yearly exemption amount. The recipient of the stock would take your cost basis and incur the capital gain when they sell.

I plan on giving $10k a year until all the stock is transferred. I think the gift tax threshold is around $12,000 give or take.

 

[financeNfootball]

Yea, you should be safe at 10k per year. That's also per person, so could possibly double that if your mom is still living and she works into the overall gameplan.

 

[blythewood tigers]

I plan on giving $10k a year until all the stock is transferred. I think the gift tax threshold is around $12,000 give or take.

Obviously don't know your financial situation, but if at all possible, pay cash under the table now (no taxes for either party) and just keep the plan. Is there a specific reason why you have to transfer this particular stock? It seems like all you are trying to do is transfer currency.

 

[rht7467]

Yea, you should be safe at 10k per year. That's also per person, so could possibly double that if your mom is still living and she works into the overall gameplan.

The gift tax annual exclusion is $14,000 per year. As this guy states, you can effectively double it to $28,000 if your mom is living. Also, if you are married, you can double it further (e.g., to $56,000), as you and your spouse can split gifts for gift tax purposes. If you go over the annual amount, don't worry about it. Your lifetime gift/estate tax exemption is currently $5,490,000, and you have to burn through that before you would ever pay gift tax. (Also, you do not have to elect anything to use it.) Last, gifts are not taxable income, so there is no real need to pay it "under table."

 

[CLEMSON96JDH]

Some excellent responses in this thread by @rht7467 and @ATLTigerJNW .

 

[sloanMB]

The gift tax annual exclusion is $14,000 per year. As this guy states, you can effectively double it to $28,000 if your mom is living. Also, if you are married, you can double it further (e.g., to $56,000), as you and your spouse can split gifts for gift tax purposes. If you go over the annual amount, don't worry about it. Your lifetime gift/estate tax exemption is currently $5,490,000, and you have to burn through that before you would ever pay gift tax. (Also, you do not have to elect anything to use it.) Last, gifts are not taxable income, so there is no real need to pay it "under table."

This is the answer.

 

[rht7467]

Not 100% positive of this, but fairly certain that you - the giver - would not owe any capital gains taxes when gifting stock shares to a family member. The cost basis would transfer to the recipient, and they would incur any capital gain taxes whenever they sold the position. If you're up there in age, it might be better to hold the stock and allow beneficiaries to get a step up in basis upon death. Otherwise, I think the recipient would just have to accept the future tax hit when they sell the gifted stock shares.

For your original question, this is the correct answer. Your basis transfers to the donee, and he pays the capital gains tax when he sells.

 

[ArmchairTiger]

Thanks for all the good insight.

 

[PICPAW]

You need to research the "gift tax." You, as the donor, could owe gift tax if the value of the gift exceeds the yearly exemption amount and you do not use your life time exemption amount (approx. 5 million). You would have to file a gift tax return if the gift exceed the yearly exemption amount. The recipient of the stock would take your cost basis and incur the capital gain when they sell.

Not knowing your finances for the current tax year, I would tend to agree with this assessment.

 

[hamp]

short answer: no . donee assumes your basis and any gain is transferred to them.