By golly, I do believe I am the first person to ever ask
this question on the internet. I kid you not.
What basis does the donor use when gifting stock that has
long-term capital gains? This is important because the
donor is trying to stay under the $12000 a year (adjusted
for inflation) gift tax return reporting requirement.
Don't tell me about the donee (the gift receipient)--the
internet is legion with answers to this question. I am
asking about the donor.
Concrete example:
Granma wants to gift a stock, Castro Boat Systems (CBS) (of Miami, FL), she bought in 1959 for $1 a share. As good luck would have it, the dang thing is actually worth $10 a share today. Granma is in the highest tax bracket and wants to gift the stock to her deadbeat nephew Ray, who is in the lowest bracket, so he may sell this stock in 2008. She wants to stay under the $12000 a year ($24000 a year if spouse included; indexed for inflation) ceiling so that she may avoid having to file a gift tax return form (remember, she's paranoid about reporting stuff with the government). How many shares can Granma give Ray and stay under the $12000 limit? Is it 12000 shares ($12000/$1), or 1200 shares ($12000/$10)? Assume Granma has a unlimited number of shares to give, so it's feasible. IRS publication 551, as typical for most IRS publications, was full of introductory material and worthless (albeit only 12 pages long instead of the usual 100 pages of fluff). RL
<< ======================================================= >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2006) - All rights reserved. >> << ======================================================= >>
Granma wants to gift a stock, Castro Boat Systems (CBS) (of Miami, FL), she bought in 1959 for $1 a share. As good luck would have it, the dang thing is actually worth $10 a share today. Granma is in the highest tax bracket and wants to gift the stock to her deadbeat nephew Ray, who is in the lowest bracket, so he may sell this stock in 2008. She wants to stay under the $12000 a year ($24000 a year if spouse included; indexed for inflation) ceiling so that she may avoid having to file a gift tax return form (remember, she's paranoid about reporting stuff with the government). How many shares can Granma give Ray and stay under the $12000 limit? Is it 12000 shares ($12000/$1), or 1200 shares ($12000/$10)? Assume Granma has a unlimited number of shares to give, so it's feasible. IRS publication 551, as typical for most IRS publications, was full of introductory material and worthless (albeit only 12 pages long instead of the usual 100 pages of fluff). RL
<< ======================================================= >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2006) - All rights reserved. >> << ======================================================= >>