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Gifting stock that has a loss on original basis?
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Frustrated
Jun 6, 2016, 3:19:28 PM6/6/16
to
Lets say I gift 1,000 share of a stock currently selling at $14. That requires no paperwork or tax; right?
Lets further say I bought the stock at $16, so the stock has a $2 loss per share. If the recipient sells the stock they have a $2,000 capital loss. Is that correct? If not, how does it work? Thanks
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Lets further say I bought the stock at $16, so the stock has a $2 loss per share. If the recipient sells the stock they have a $2,000 capital loss. Is that correct? If not, how does it work? Thanks
--
<< ------------------------------------------------------- >>
<< 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 (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
Arthur Kamlet
Jun 6, 2016, 3:29:32 PM6/6/16
to
In article <8ea50577-e300-420c...@googlegroups.com>,
>Lets further say I bought the stock at $16, so the stock has a $2 loss
>per share. If the recipient sells the stock they have a $2,000 capital
>loss. Is that correct? If not, how does it work? Thanks
No, you cannot give away a loss.
Since the FMV on date of gift is less than your own cost basis,
the recipient's cost basis is determined when he sells it.
He uses FMV on date of gift to determine loss, and uses the
donor's basis to determine gain.
It is possible there could be neither gain nor loss using this
procedure.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
Frustrated <wa...@lippman.info> wrote:
>Lets say I gift 1,000 share of a stock currently selling at $14. That
>requires no paperwork or tax; right?
If that's your only gift to this person all year, correct.
>Lets say I gift 1,000 share of a stock currently selling at $14. That
>requires no paperwork or tax; right?
>Lets further say I bought the stock at $16, so the stock has a $2 loss
>per share. If the recipient sells the stock they have a $2,000 capital
>loss. Is that correct? If not, how does it work? Thanks
Since the FMV on date of gift is less than your own cost basis,
the recipient's cost basis is determined when he sells it.
He uses FMV on date of gift to determine loss, and uses the
donor's basis to determine gain.
It is possible there could be neither gain nor loss using this
procedure.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
Barry Margolin
Jun 6, 2016, 5:25:31 PM6/6/16
to
In article <nj4iss$ml7$1...@reader1.panix.com>,
realize the loss yourself, give the cash, and let them buy back the
stock? If you bought it back yourself it would be a wash sale, but I
don't imagine the IRS would consider this a sham to get around the wash
sale rule (there's nothing forcing the gift recipient to buy the same
stock).
--
Barry Margolin
Arlington, MA
kam...@panix.com (Arthur Kamlet) wrote:
> In article <8ea50577-e300-420c...@googlegroups.com>,
> Frustrated <wa...@lippman.info> wrote:
> >Lets say I gift 1,000 share of a stock currently selling at $14. That
> >requires no paperwork or tax; right?
>
> If that's your only gift to this person all year, correct.
>
>
>
> >Lets further say I bought the stock at $16, so the stock has a $2 loss
> >per share. If the recipient sells the stock they have a $2,000 capital
> >loss. Is that correct? If not, how does it work? Thanks
>
>
> No, you cannot give away a loss.
>
>
> Since the FMV on date of gift is less than your own cost basis,
> the recipient's cost basis is determined when he sells it.
>
>
> He uses FMV on date of gift to determine loss, and uses the
> donor's basis to determine gain.
>
>
> It is possible there could be neither gain nor loss using this
> procedure.
So is it usually more tax-advantageous to sell the stock so you can
> In article <8ea50577-e300-420c...@googlegroups.com>,
> Frustrated <wa...@lippman.info> wrote:
> >Lets say I gift 1,000 share of a stock currently selling at $14. That
> >requires no paperwork or tax; right?
>
> If that's your only gift to this person all year, correct.
>
>
>
> >Lets further say I bought the stock at $16, so the stock has a $2 loss
> >per share. If the recipient sells the stock they have a $2,000 capital
> >loss. Is that correct? If not, how does it work? Thanks
>
>
> No, you cannot give away a loss.
>
>
> Since the FMV on date of gift is less than your own cost basis,
> the recipient's cost basis is determined when he sells it.
>
>
> He uses FMV on date of gift to determine loss, and uses the
> donor's basis to determine gain.
>
>
> It is possible there could be neither gain nor loss using this
> procedure.
realize the loss yourself, give the cash, and let them buy back the
stock? If you bought it back yourself it would be a wash sale, but I
don't imagine the IRS would consider this a sham to get around the wash
sale rule (there's nothing forcing the gift recipient to buy the same
stock).
--
Barry Margolin
Arlington, MA
Frustrated
Jun 6, 2016, 5:25:31 PM6/6/16
to
On Monday, June 6, 2016 at 3:29:32 PM UTC-4, Arthur Kamlet wrote:
> In article <8ea50577-e300-420c...@googlegroups.com>,
> In article <8ea50577-e300-420c...@googlegroups.com>,
> Frustrated wrote:
> >Lets say I gift 1,000 share of a stock currently selling at $14. That
> >requires no paperwork or tax; right?
>
> If that's your only gift to this person all year, correct.
>
>
>
> >Lets further say I bought the stock at $16, so the stock has a $2 loss
> >per share. If the recipient sells the stock they have a $2,000 capital
> >loss. Is that correct? If not, how does it work? Thanks
>
>
> No, you cannot give away a loss.
>
>
> Since the FMV on date of gift is less than your own cost basis,
> the recipient's cost basis is determined when he sells it.
>
>
> He uses FMV on date of gift to determine loss, and uses the
> donor's basis to determine gain.
>
>
> It is possible there could be neither gain nor loss using this
> procedure.
> --
>
> ArtKamlet at a o l dot c o m Columbus OH K2PZH
>
So using my example ($16 cost, $14 fmv at transfer) if the recipient sells at $15 there $0 capital gain/loss, but at $20 there is $4 capital gain. Is that right?
> >Lets say I gift 1,000 share of a stock currently selling at $14. That
> >requires no paperwork or tax; right?
>
> If that's your only gift to this person all year, correct.
>
>
>
> >Lets further say I bought the stock at $16, so the stock has a $2 loss
> >per share. If the recipient sells the stock they have a $2,000 capital
> >loss. Is that correct? If not, how does it work? Thanks
>
>
> No, you cannot give away a loss.
>
>
> Since the FMV on date of gift is less than your own cost basis,
> the recipient's cost basis is determined when he sells it.
>
>
> He uses FMV on date of gift to determine loss, and uses the
> donor's basis to determine gain.
>
>
> It is possible there could be neither gain nor loss using this
> procedure.
> --
>
> ArtKamlet at a o l dot c o m Columbus OH K2PZH
>
So I am really better off selling at a loss and giving cash.
Arthur Kamlet
Jun 6, 2016, 6:00:44 PM6/6/16
to
In article <daf348e4-b152-43f5...@googlegroups.com>,
>So I am really better off selling at a loss and giving cash.
>
If that's your goal, yes.
Where this becomes an issue is where you are carrying a humongous
capital loss carryover and cannot see an advantage for taking
more loss.
Frustrated <wa...@lippman.info> wrote:
>On Monday, June 6, 2016 at 3:29:32 PM UTC-4, Arthur Kamlet wrote:
>> In article <8ea50577-e300-420c...@googlegroups.com>,
>> Frustrated wrote:
>> >Lets say I gift 1,000 share of a stock currently selling at $14. That
>> >requires no paperwork or tax; right?
>>
>> If that's your only gift to this person all year, correct.
>>
>>
>>
>> >Lets further say I bought the stock at $16, so the stock has a $2 loss
>> >per share. If the recipient sells the stock they have a $2,000 capital
>> >loss. Is that correct? If not, how does it work? Thanks
>>
>>
>> No, you cannot give away a loss.
>>
>>
>> Since the FMV on date of gift is less than your own cost basis,
>> the recipient's cost basis is determined when he sells it.
>>
>>
>> He uses FMV on date of gift to determine loss, and uses the
>> donor's basis to determine gain.
>>
>>
>> It is possible there could be neither gain nor loss using this
>> procedure.
>> --
>>
>On Monday, June 6, 2016 at 3:29:32 PM UTC-4, Arthur Kamlet wrote:
>> In article <8ea50577-e300-420c...@googlegroups.com>,
>> Frustrated wrote:
>> >Lets say I gift 1,000 share of a stock currently selling at $14. That
>> >requires no paperwork or tax; right?
>>
>> If that's your only gift to this person all year, correct.
>>
>>
>>
>> >Lets further say I bought the stock at $16, so the stock has a $2 loss
>> >per share. If the recipient sells the stock they have a $2,000 capital
>> >loss. Is that correct? If not, how does it work? Thanks
>>
>>
>> No, you cannot give away a loss.
>>
>>
>> Since the FMV on date of gift is less than your own cost basis,
>> the recipient's cost basis is determined when he sells it.
>>
>>
>> He uses FMV on date of gift to determine loss, and uses the
>> donor's basis to determine gain.
>>
>>
>> It is possible there could be neither gain nor loss using this
>> procedure.
>> --
>>
>So using my example ($16 cost, $14 fmv at transfer) if the recipient
>sells at $15 there $0 capital gain/loss, but at $20 there is $4 capital
>gain. Is that right?
Yes.
>sells at $15 there $0 capital gain/loss, but at $20 there is $4 capital
>gain. Is that right?
>So I am really better off selling at a loss and giving cash.
>
Where this becomes an issue is where you are carrying a humongous
capital loss carryover and cannot see an advantage for taking
more loss.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
ArtKamlet at a o l dot c o m Columbus OH K2PZH
Arthur Kamlet
Jun 6, 2016, 6:10:48 PM6/6/16
to
In article <barmar-8BB618....@88-209-239-213.giganet.hu>,
But if you've already built up a humongous capital loss, taking
even more loss may not help much.
>If you bought it back yourself it would be a wash sale, but I
>don't imagine the IRS would consider this a sham to get around the wash
>sale rule (there's nothing forcing the gift recipient to buy the same
>stock).
The way it works, if the recipient sells it he cannot use any
built in loss. His basis for loss is FMV on date of gift.
Barry Margolin <bar...@alum.mit.edu> wrote:
>In article <nj4iss$ml7$1...@reader1.panix.com>,
> kam...@panix.com (Arthur Kamlet) wrote:
>
>> In article <8ea50577-e300-420c...@googlegroups.com>,
>> Frustrated <wa...@lippman.info> wrote:
>> >Lets say I gift 1,000 share of a stock currently selling at $14. That
>> >requires no paperwork or tax; right?
>>
>> If that's your only gift to this person all year, correct.
>>
>>
>>
>> >Lets further say I bought the stock at $16, so the stock has a $2 loss
>> >per share. If the recipient sells the stock they have a $2,000 capital
>> >loss. Is that correct? If not, how does it work? Thanks
>>
>>
>> No, you cannot give away a loss.
>>
>>
>> Since the FMV on date of gift is less than your own cost basis,
>> the recipient's cost basis is determined when he sells it.
>>
>>
>> He uses FMV on date of gift to determine loss, and uses the
>> donor's basis to determine gain.
>>
>>
>> It is possible there could be neither gain nor loss using this
>> procedure.
>
>So is it usually more tax-advantageous to sell the stock so you can
>realize the loss yourself, give the cash, and let them buy back the
>stock?
Yes; see my reply to OP.
>In article <nj4iss$ml7$1...@reader1.panix.com>,
> kam...@panix.com (Arthur Kamlet) wrote:
>
>> In article <8ea50577-e300-420c...@googlegroups.com>,
>> Frustrated <wa...@lippman.info> wrote:
>> >Lets say I gift 1,000 share of a stock currently selling at $14. That
>> >requires no paperwork or tax; right?
>>
>> If that's your only gift to this person all year, correct.
>>
>>
>>
>> >Lets further say I bought the stock at $16, so the stock has a $2 loss
>> >per share. If the recipient sells the stock they have a $2,000 capital
>> >loss. Is that correct? If not, how does it work? Thanks
>>
>>
>> No, you cannot give away a loss.
>>
>>
>> Since the FMV on date of gift is less than your own cost basis,
>> the recipient's cost basis is determined when he sells it.
>>
>>
>> He uses FMV on date of gift to determine loss, and uses the
>> donor's basis to determine gain.
>>
>>
>> It is possible there could be neither gain nor loss using this
>> procedure.
>
>So is it usually more tax-advantageous to sell the stock so you can
>realize the loss yourself, give the cash, and let them buy back the
>stock?
But if you've already built up a humongous capital loss, taking
even more loss may not help much.
>If you bought it back yourself it would be a wash sale, but I
>don't imagine the IRS would consider this a sham to get around the wash
>sale rule (there's nothing forcing the gift recipient to buy the same
>stock).
built in loss. His basis for loss is FMV on date of gift.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
ArtKamlet at a o l dot c o m Columbus OH K2PZH
adj...@verizon.net
Jun 6, 2016, 6:15:50 PM6/6/16
to
> So is it usually more tax-advantageous to sell the stock so you can
> realize the loss yourself, give the cash, and let them buy back the
> stock? If you bought it back yourself it would be a wash sale, but I
> don't imagine the IRS would consider this a sham to get around the wash
> sale rule (there's nothing forcing the gift recipient to buy the same
> stock).
The IRS has held the related party rule to apply to wash sales so the purchase of the same stock by a close related party could deny the original loss on the sale. While "there's nothing forcing the gift recipient to buy the same stock" may be true, it's the purchase by a close relative, not the reason for the purchase that is determinative.
> realize the loss yourself, give the cash, and let them buy back the
> stock? If you bought it back yourself it would be a wash sale, but I
> don't imagine the IRS would consider this a sham to get around the wash
> sale rule (there's nothing forcing the gift recipient to buy the same
> stock).
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