Here?s the scenario:
You say the stock was valued at $5,000 when you received it. Do you know what the person who gave it to you paid for it?
There are no tax consequences until your grandchild goes to sell the stock. If you can find out the basis of the stock when you received it, that will be your grandchild's basis when he sells it.
If you don't know the basis when you got it, and can't find out, your grandchild will likely end up paying tax on the entire sale price when he eventually sells it.
If the person who gift you the gift paid less than $5000, then your cost basis and the person you give it to has a cost basis of what the original person paid for it. You can perhaps try the internet to look up historical prices and stock splits.
If the person who gave you the gift paid more than $5000, then your cost basis and the person you give it to has a cost basis of $5000. This rule is to prevent the giver of the gift from passin on capital losses to their kids.
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