How to avoid capital gains tax?

Jun 06, 2007 3 Replies
A

I would like to give my sister-in-law a loan to start a business. Unfortunately, my money is tied up in mutual funds. I want to avoid selling my mutual fund shares and giving her cash ? thus incurring capital gains on my investment. Is there anyway I could transfer the mutual fund shares directly to her without incurring capital gains and thus having to pay the associated tax? She would be in a much better financial position to pay the capital gains when she converts the mutual fund investments to cash.




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S

Sure; make them a gift. There's a limit how much you can give in one years without paying gift taxes (or at least filing a return), but it's at least $24,000 ($48,000 if you're both married).

Capital gains rate is fairly low, so hers might not be much less than yours if she has other income. Seth

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J

Basis follows the gift. i.e. after you gift it, she has your cost basis and purchase date. She then pays the tax when she sells. You can gift $12000 to one person with no further tax issues or paperwork. JOE

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B

that would be a taxable gift subject to the gift tax rules

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-----> real address on hobokeni or hobokenx

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