Gifting Brokerage Account

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6d1v7x3
Posts: 152
Joined: Tue Oct 08, 2019 4:28 pm

Gifting Brokerage Account

Post by 6d1v7x3 »

Can I give the contents of my Fidelity brokerage account to someone else who also has a Fidelity account? My account is composed of ETF's and they will not be sold by either myself nor the person who will receive them. Is this going to be a taxable event for either one of us? Thank you very much for any help.
mhalley
Posts: 9914
Joined: Tue Nov 20, 2007 5:02 am

Re: Gifting Brokerage Account

Post by mhalley »

Yes, Fidelity has a procedure for gifting here
https://www.fidelity.com/customer-servi ... ift-shares
And here is info on tax implications of gifting
https://www.getearlybird.io/blog/stock- ... st%20basis.
Recipients never owe gift taxes, and you can use your gift tax exclusion (17k for 2023) (or fill out a form for irs if gifting more than 17k (12.9 million lifetime)) to not owe taxes yourself.
Note that if you gift etfs, you gift your cost basis so if the recipient sells they will owe cap gains taxes on your basis.
Topic Author
6d1v7x3
Posts: 152
Joined: Tue Oct 08, 2019 4:28 pm

Re: Gifting Brokerage Account

Post by 6d1v7x3 »

mhalley wrote: Thu Mar 16, 2023 8:32 pm Yes, Fidelity has a procedure for gifting here
https://www.fidelity.com/customer-servi ... ift-shares
And here is info on tax implications of gifting
https://www.getearlybird.io/blog/stock- ... st%20basis.
Recipients never owe gift taxes, and you can use your gift tax exclusion (17k for 2023) (or fill out a form for irs if gifting more than 17k (12.9 million lifetime)) to not owe taxes yourself.
Note that if you gift etfs, you gift your cost basis so if the recipient sells they will owe cap gains taxes on your basis.
Thank you so much for your reply. The person I am gifting to is a very close family member and I can guarantee you that they will not be selling. In fact, they want to return everything back to me in the future. Can that happen without any tax implications as well? I'm sorry for the complexity in my question.
alex_686
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Joined: Mon Feb 09, 2015 1:39 pm

Re: Gifting Brokerage Account

Post by alex_686 »

6d1v7x3 wrote: Thu Mar 16, 2023 8:49 pm
mhalley wrote: Thu Mar 16, 2023 8:32 pm Yes, Fidelity has a procedure for gifting here
https://www.fidelity.com/customer-servi ... ift-shares
And here is info on tax implications of gifting
https://www.getearlybird.io/blog/stock- ... st%20basis.
Recipients never owe gift taxes, and you can use your gift tax exclusion (17k for 2023) (or fill out a form for irs if gifting more than 17k (12.9 million lifetime)) to not owe taxes yourself.
Note that if you gift etfs, you gift your cost basis so if the recipient sells they will owe cap gains taxes on your basis.
Thank you so much for your reply. The person I am gifting to is a very close family member and I can guarantee you that they will not be selling. In fact, they want to return everything back to me in the future. Can that happen without any tax implications as well? I'm sorry for the complexity in my question.
Why is this happening?

If this is to dodge taxes then the answer is no, it will be a taxable event. A gift must be a gift with no expectations of it being returned. If there are expectations then it is a loan.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Topic Author
6d1v7x3
Posts: 152
Joined: Tue Oct 08, 2019 4:28 pm

Re: Gifting Brokerage Account

Post by 6d1v7x3 »

I have passed along the information here and my family member will not be returning the ETFs in the future. Will my gifting these ETFs count as income for my family member?
mhalley
Posts: 9914
Joined: Tue Nov 20, 2007 5:02 am

Re: Gifting Brokerage Account

Post by mhalley »

It will be income only if they sell, and only the amount above your basis.
123
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Joined: Fri Oct 12, 2012 3:55 pm

Re: Gifting Brokerage Account

Post by 123 »

The IRS does not consider gifts received as taxable income. Many other organizations follow the IRS guideline but different government and private programs (including financial organizations) may have their own definition of income and it could differ from the IRS.
The closest helping hand is at the end of your own arm.
Navillus1968
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Joined: Mon Feb 22, 2021 5:00 pm

Re: Gifting Brokerage Account

Post by Navillus1968 »

6d1v7x3 wrote: Thu Mar 16, 2023 8:14 pm Can I give the contents of my Fidelity brokerage account to someone else who also has a Fidelity account? My account is composed of ETF's and they will not be sold by either myself nor the person who will receive them. Is this going to be a taxable event for either one of us? Thank you very much for any help.
Neither the donor (you) nor the donee (recipient of the gift) will pay taxes on your gift when the gift is made. However, the EFTs you gift carry with them your cost basis, so that if the donee ever were to sell the shares, their capital gains would be calculated on the price you paid & taxes would be due at that point. There are some exceptions (donations to charity, death of the donee), but that's the gist.

If your gift exceeds the Annual Gift Tax Exemption, which is $17,000 in 2023, the donor needs to report the gift to the IRS using Form 709. All this does is to keep track of the donor's gifts over his lifetime that exceed the annual exemption. That Form 709 amount reduces the donor's Estate Tax Exemption dollar for dollar.
This is a moot point for most people, because the Lifetime Gift & Estate tax exemption is huge- $12,920,000 for 2023.

Gift Tax article- https://smartasset.com/estate-planning/ ... -and-rates
doobiedoo
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Location: Southern CA

Re: Gifting Brokerage Account

Post by doobiedoo »

6d1v7x3 wrote: Thu Mar 16, 2023 8:14 pm Can I give the contents of my Fidelity brokerage account to someone else who also has a Fidelity account? My account is composed of ETF's ..
mhalley wrote: Thu Mar 16, 2023 8:32 pm Yes, Fidelity has a procedure for gifting here
https://www.fidelity.com/customer-servi ... ift-shares
And here is info on tax implications of gifting
https://www.getearlybird.io/blog/stock- ... st%20basis.
Recipients never owe gift taxes, and you can use your gift tax exclusion (17k for 2023) (or fill out a form for irs if gifting more than 17k (12.9 million lifetime)) to not owe taxes yourself.
Note that if you gift etfs, you gift your cost basis so if the recipient sells they will owe cap gains taxes on your basis.
I have gifted shares several times from my Fidelity taxable account. I followed the procedure linked above.
But I doubt you can gift the actual Fidelity account. That would involve changing Social Security account numbers, title, beneficiaries, etc. From Fidelity's point of view this is complicated, especially when you consider things like auto-invest options, and check-writing capabilities.

Instead I think you would gift all the shares of all the ETFs. I don't know if that would require multiple forms and letters of instruction.
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