Gifting stock to family
Gifting stock to family
I stumbled across this article: http://www.forbes.com/sites/ashleaebeli ... -tax-hike/ and it gave me an idea.
I am paying back a loan from my father at $1000/month. According to the article I can gift appreciated stock to him and he will pay taxes on the gains, but he is retired and doesn't make enough money to pay taxes, thus it is an arbitrage of sorts. Making my monthly payment to him in this way is desirable since I want to reduce the amount of an appreciated ETF that I have in a Scottrade account.
While I have found info on gifting to charities, I can't quite figure out how to gift an ETF to a family member. I've a quick search of both the IRS and Scottrade but the info seems buried. Can someone point me in the correct direction and/or point out possible pitfalls from doing this?
I am also paying him interest on this loan which I deduct from my taxes. Will this affect anything?
I am paying back a loan from my father at $1000/month. According to the article I can gift appreciated stock to him and he will pay taxes on the gains, but he is retired and doesn't make enough money to pay taxes, thus it is an arbitrage of sorts. Making my monthly payment to him in this way is desirable since I want to reduce the amount of an appreciated ETF that I have in a Scottrade account.
While I have found info on gifting to charities, I can't quite figure out how to gift an ETF to a family member. I've a quick search of both the IRS and Scottrade but the info seems buried. Can someone point me in the correct direction and/or point out possible pitfalls from doing this?
I am also paying him interest on this loan which I deduct from my taxes. Will this affect anything?
Stay thrifty my friends.
-
- Posts: 7189
- Joined: Sun Dec 16, 2007 11:25 am
Re: Gifting stock to family
I gifted some stock to a daughter some years ago. My Fidelity brokerage account people said to just have my daughter open an account with them, and once I knew the account number I could just transfer some of my stock into it. She opened the account and I think I did the transfer into it online. It's been a while so I can't be sure of the details but I can recall it was a trivial process.RobG wrote:I stumbled across this article: http://www.forbes.com/sites/ashleaebeli ... -tax-hike/ and it gave me an idea.
I am paying back a loan from my father at $1000/month. According to the article I can gift appreciated stock to him and he will pay taxes on the gains, but he is retired and doesn't make enough money to pay taxes, thus it is an arbitrage of sorts. Making my monthly payment to him in this way is desirable since I want to reduce the amount of an appreciated ETF that I have in a Scottrade account.
While I have found info on gifting to charities, I can't quite figure out how to gift an ETF to a family member. I've a quick search of both the IRS and Scottrade but the info seems buried. Can someone point me in the correct direction and/or point out possible pitfalls from doing this?
I am also paying him interest on this loan which I deduct from my taxes. Will this affect anything?
JW
Retired at Last
- Peter Foley
- Posts: 5533
- Joined: Fri Nov 23, 2007 9:34 am
- Location: Lake Wobegon
Re: Gifting stock to family
I gifted appreciated mutual fund shares to both my daughters last year. I had them set up an account at Schwab, where I have a taxable account, and then provided Schwab with a letter to transfer xxx number of shares to their account numbers.
Re: Gifting stock to family
Vanguard requires you go through the Medallion Signature process to do the same, but other than that it's straightforward enough.
Re: Gifting stock to family
I hate to be the guy who always drops you-know-what in the punch bowl, but this won't work or, at the very least, it's tax evasion. Your father is not the one to pay tax on the gain, you should, when you transfer appreciated stock in satisfaction of a debt obligation. OK, there you have it.RobG wrote:I am paying back a loan from my father at $1000/month. According to the article I can gift appreciated stock to him and he will pay taxes on the gains...
Bruce
absit iniuria verbis
Re: Gifting stock to family
OK, it sounds like I (or him) just open a Scottrade account in his name and transfer the stock to him and he can sell it or whatever - just like he bought it.
Looking at For 709 instructions it doesn't look like I have to report it if it is under $14,000.
Looking at For 709 instructions it doesn't look like I have to report it if it is under $14,000.
Stay thrifty my friends.
Re: Gifting stock to family
Is this your opinion of a moral obligation or the IRS's determination of a legal obligation?Retread wrote:I hate to be the guy who always drops you-know-what in the punch bowl, but this won't work or, at the very least, it's tax evasion. Your father is not the one to pay tax on the gain, you should, when you transfer appreciated stock in satisfaction of a debt obligation. OK, there you have it.RobG wrote:I am paying back a loan from my father at $1000/month. According to the article I can gift appreciated stock to him and he will pay taxes on the gains...
Bruce
Stay thrifty my friends.
Re: Gifting stock to family
Retread is right. See Treas. Reg. sec. 1.1001-2(a)(1) ("[T]he amount realized from a sale or other disposition of property includes the amount of liabilities from which the transferor is discharged as a result of the sale or disposition.").
Re: Gifting stock to family
Yeah, that occurred to me after I posted. Because it is a debt obligation I can't do it. This is good information none-the-less so thanks Retread. Dang IRS is more clever than people give them credit forEric wrote:Retread is right. See Treas. Reg. sec. 1.1001-2(a)(1) ("[T]he amount realized from a sale or other disposition of property includes the amount of liabilities from which the transferor is discharged as a result of the sale or disposition.").
Stay thrifty my friends.
Re: Gifting stock to family
Sorry, it's both. Otherwise, it would be a great way to avoid capital gains by just paying your creditors with appreciated stock. Satisfying a debt with appreciated stock is no different from a tax perspective than if you sold it and used the proceeds to pay the debt.RobG wrote:Is this your opinion of a moral obligation or the IRS's determination of a legal obligation?Retread wrote:I hate to be the guy who always drops you-know-what in the punch bowl, but this won't work or, at the very least, it's tax evasion. Your father is not the one to pay tax on the gain, you should, when you transfer appreciated stock in satisfaction of a debt obligation. OK, there you have it.RobG wrote:I am paying back a loan from my father at $1000/month. According to the article I can gift appreciated stock to him and he will pay taxes on the gains...
Bruce
Bruce
absit iniuria verbis
Re: Gifting stock to family
If you sign up for Voice Verification you do not need a Medallion Signature.hicabob wrote:Vanguard requires you go through the Medallion Signature process to do the same, but other than that it's straightforward enough.