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Subject Author Date
Re: Gift of appreciated stock Stuart A. Bronstein 10-24-2006
Posted by Stuart A. Bronstein on October 24, 2006, 7:08 am
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> citysite@yahoo.com wrote:

>> I have shares which have gone up in value. I wish to gift
>> them to my son. There will be no gift tax since the value
>> is less than $11K.
>>
>> If he sells the shares, what will be his cost basis?

> His cost basis will be your cost basis in the shares. Your
> gift includes the untaxed capital gains/appreciation.

I suppose he could sell the stock to his son, on a long term
note. Dad would have taxable income spread out over however
many years the note goes for (whether son actually makes a
payment or Dad forgives it for the year in question).

But son would have current market value as his basis.

Can you think of any reason that wouldn't work?

Stu

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Posted by Arthur Kamlet on October 25, 2006, 7:05 pm
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>> citysite@yahoo.com wrote:

>>> I have shares which have gone up in value. I wish to gift
>>> them to my son. There will be no gift tax since the value
>>> is less than $11K.
>>>
>>> If he sells the shares, what will be his cost basis?

>> His cost basis will be your cost basis in the shares. Your
>> gift includes the untaxed capital gains/appreciation.

> I suppose he could sell the stock to his son, on a long term
> note. Dad would have taxable income spread out over however
> many years the note goes for (whether son actually makes a
> payment or Dad forgives it for the year in question).
>
> But son would have current market value as his basis.
>
> Can you think of any reason that wouldn't work?

How are you going to handle the imputed interest on that
investment loan?

__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH

<< ======================================================= >>
<< 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 Stuart A. Bronstein on October 27, 2006, 10:55 pm
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kamlet@panix.com (Arthur Kamlet) wrote:


>> I suppose he could sell the stock to his son, on a long term
>> note. Dad would have taxable income spread out over however
>> many years the note goes for (whether son actually makes a
>> payment or Dad forgives it for the year in question).
>>
>> But son would have current market value as his basis.
>>
>> Can you think of any reason that wouldn't work?

> How are you going to handle the imputed interest on that
> investment loan?

That's the reason for the installment sale - he'd have to
recognize the income, but could stretch it over a number of
years to minimize the effects of bracket creep.

Stu

<< ======================================================= >>
<< 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 Arthur Kamlet on October 28, 2006, 6:40 pm
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> kamlet@panix.com (Arthur Kamlet) wrote:

>>> I suppose he could sell the stock to his son, on a long term
>>> note. Dad would have taxable income spread out over however
>>> many years the note goes for (whether son actually makes a
>>> payment or Dad forgives it for the year in question).
>>>
>>> But son would have current market value as his basis.
>>>
>>> Can you think of any reason that wouldn't work?

>> How are you going to handle the imputed interest on that
>> investment loan?

> That's the reason for the installment sale - he'd have to
> recognize the income, but could stretch it over a number of
> years to minimize the effects of bracket creep.

Sure.

But the imputed interest on the unpaid principal still has
to be taken into account somehow.

__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH

<< ======================================================= >>
<< 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 Stuart A. Bronstein on October 30, 2006, 2:31 am
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kamlet@panix.com (Arthur Kamlet) wrote:
>> kamlet@panix.com (Arthur Kamlet) wrote:

>>> How are you going to handle the imputed interest on that
>>> investment loan?

>> That's the reason for the installment sale - he'd have to
>> recognize the income, but could stretch it over a number of
>> years to minimize the effects of bracket creep.

> Sure.
>
> But the imputed interest on the unpaid principal still has
> to be taken into account somehow.

Of course.

Actually after thinking about it, perhaps it's not such a
good idea. He'd have imputed interest and he'd also have
imputed principal income. The longer the principal income
gets stretched out, the more the imputed interest. So it
may get expensive.

Stu

<< ======================================================= >>
<< 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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