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Subject Author Date
How to avoid capital gains tax? AugieDoggie 06-06-2007
Posted by AugieDoggie on June 6, 2007, 4:39 pm
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 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.

<< ------------------------------------------------------- >>
<< 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 >>
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Posted by Seth on June 8, 2007, 1:21 pm
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> 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?

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).

> She would be in a much better financial position to pay the
> capital gains when she converts the mutual fund investments
> to cash.

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

Seth

<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>

Posted by joetaxpayer on June 8, 2007, 1:21 pm
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AugieDoggie wrote:

> 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 =96 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.

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

<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>

Posted by Benjamin Yazersky CPA on June 8, 2007, 1:21 pm
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> 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.

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

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----

<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>

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