Gifting as Tax Gain Harvesting

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Gifting as Tax Gain Harvesting

Postby zzcooper123 » Fri Jul 26, 2013 8:01 am

How many Bogleheads gift to their children on a regular basis? Has anyone utilized the Unified Credit? Seems like a great way to do Tax Gain Harvesting.
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Re: Gifting as Tax Gain Harvesting

Postby dickenjb » Fri Jul 26, 2013 8:38 am

I looked into it but decided it was too much hassle.

Vanguard wants a medallion signature guarantee and fill out a multipage form.

My kids have their own investments and earn roughly half the $1900 exemption for passive income already.

So for saving 15% of a grand or $150 a year per kid I decided it was too much hassle.

Besides I did TLH on TISM a couple years back and my cap gains are shielded for a very long time. Although the plan is to take the $3000 deduction against ordinary income for essentially forever.

Your appreciated securities will be stepped up at death anyway. Or you can use them for charitable contributions and also duck the CG tax that way.
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Re: Gifting as Tax Gain Harvesting

Postby livesoft » Fri Jul 26, 2013 11:10 am

I give my kids shares that have appreciated quite a bit instead of cash. This serves several purposes including:
They have a 0% cap gains tax rate.
They get practice with a brokerage account.
They get practice with filling out a Schedule D on their tax return.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Gifting as Tax Gain Harvesting

Postby zzcooper123 » Sat Jul 27, 2013 2:52 pm

The 5.25 million lifetime credit seems pretty attractive to me just for filling out a gift tax form. I have a Limited Partnership so transferring percentages and shares is easy.
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Re: Gifting as Tax Gain Harvesting

Postby Wagnerjb » Sat Jul 27, 2013 4:33 pm

I gift highly appreciated shares to my children occasionally. It makes great tax sense at times.

Best wishes.
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Re: Gifting as Tax Gain Harvesting

Postby Artsdoctor » Sat Jul 27, 2013 7:03 pm

My PARENTS are in the 0% capital gains bracket and I gift appreciated shares to them regularly. I offered to pay their long-term care premiums long ago and the gifting has paid for those premiums and other things. It's worked out perfectly.

In the past, I've had to deal with the medallion signature guarantee although I'm told that I no longer have to do to that since I'm transferring from one Vanguard account to another. Don't hold me to that, though, since I've not actually done that yet.

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Re: Gifting as Tax Gain Harvesting

Postby Wagnerjb » Sat Jul 27, 2013 10:55 pm

dickenjb wrote:
Vanguard wants a medallion signature guarantee and fill out a multipage form.


Vanguard just told me about a voice recognition sign in that allows us to avoid the Medallion headache. I was annoyed at having to use Medallion in the past, and it was a breeze this time. Fax the completed form (took 2 minutes to complete) to vanguard, then call the Rep and the voice ID allows them to accept your verbal approval for the transfer.

Best wishes.
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Re: Gifting as Tax Gain Harvesting

Postby Peter Foley » Sat Jul 27, 2013 11:02 pm

I've done it once - staying under the annual gifting limit - and will do so again next year. Both daughters are in the 15% tax bracket and they are both selling the shares and using the proceeds to start 529 plans for their children. So far so good.
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Re: Gifting as Tax Gain Harvesting

Postby Artsdoctor » Sun Jul 28, 2013 11:30 am

Wagner,

That's exactly what I've been told. The Voice Recognition sign-in evidently will permit transfers to other Vanguard funds on the phone. I haven't tried it yet but that would be terrific if it's truly that easy.
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