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The cost basis of stock you received as a gift ("gifted stock") is determined by the giver's original cost basis and the fair market value (FMV) of the stock at the time you received the gift.
When gifting stock, the recipient assumes your cost basis and holding period. In other words, if you were to give a friend $12,000 worth of stock purchased five years earlier for $7,000, they...
Figuring the Cost Basis of a Gift of Stock. Start with the amount the original owner paid for the shares and add dividends and brokerage commissions.
Understanding the cost basis of gifted stock is crucial, as it influences taxation upon selling. This article explores the nuances of gifted stock, tax considerations, the process of transferring, and the key differences from inherited stock. Understanding gifted stock.
Cost basis of gifted or inherited shares. If the shares you own were a gift or an inheritance, the rules are slightly different. As a gift: You assume the original owner's cost basis—unless you ultimately sell them at a loss. In that case, use the fair market value of the shares on the date you received them to determine the loss.
If you inherit stock, the cost basis is taken from the market value of the stock on the date the donor died. As a result, you can have a lower tax bill.
As of 2024, the IRS allows you to gift up to $18,000 per year, per person — including stock. Married individuals who file jointly can gift up to $18,000 each in 2024, for a total of $36,000...
The basis of stock received as a gift depends on whether the stock gained or lost value in the donor’s hand, the donor’s adjusted basis right before the stock is given, the stock’s FMV at the time of the gift, and whether any gift tax was paid for the exchange.
Stock is a great long-term gift in lieu of cash if the recipient doesn't have a current need for the money. Gifting stock is a tax-efficient way to start transferring wealth to a...
They can deduct your cost basis in the stock, effectively passed to them. The cost basis is what you initially paid. For example, the recipient would owe capital gains tax on $3,000 if you...