Client wants to transfer appreciated securities to son, who will probably sell them. What is basis of gifted shares - original owners cost, or value as of date of gift.
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Original cost of owner on a gift. Only inherited securities get a step-up of basis of the securities. When you gift you are also gifting the original cost basis not just the current value.Last edited by NCarousso; 08-13-2018, 11:55 AM. -
Drip?
Don’t forget the cost basis includes the original cost of the stocks, plus any reinvested dividends whilst holding the shares. That could add up if held for some time. Also, it would be a good idea to research the stock for splits and mergers in the past.Circular 230 Disclosure:
Don't even think about using the information in this message!Comment
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Appreciated Securities
Because the securities have appreciated in value since the purchase until the time of the gift, you use the donor's cost basis plus the other adjustments mentioned above for income tax purposes.Comment
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Step Doctrine
If the shares are gifted and sold right away because there is a tax savings - IRS can use the Step Doctrine to say the gain goes to the gifting party. It would be interesting if the seller is in a higher tax situation, but then why was there a gift?Comment
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