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MAKO Surgical AO Message Board

  • maitlandhw maitlandhw Sep 26, 2013 10:41 AM Flag

    Inevitable tax question.

    I would like to transfer some of my shares to someone. I think I understand the max gift and gift tax but this works a little different, I think.

    If I transfer(gift) to an adult-non relative, 50% of my shares of xyz that has appreciated 100% since purchase, do I only pay cap gain on the 50% I kept?


    I buy 1000 shares of xyz @ 10. It is currently valued at 20. I give 500 shares to girlfriend. I sell 500 shares(short term). Am I only responsible for the STCG on the 500 shares I actually sold(not including the $13k cash value of the gift if it even applies)?

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    • Hi Maitlandhw,

      The cost basis transfers with the stock so when that person eventually sold they would owe capital gains based on your purchase price. you owe nothing on those shares. Any amount over the gift annual limit is reportable to the IRS and is subtracted from your lifetime gift limit. You only owe capital gains on the 50% you retain and not due until 2015 if you wait until Jan 1st. Of course if you give any to a charity or spouse there's no tax either.

      • 1 Reply to kaylawa
      • To Clarify(for me), if I made 100k in STCG and give 200k in shares away, the only responsibility I have is to report that I gave the shares away AND 100% of the tax liability is on the recipient, y/n?

        Forgive me for what this sounds like:
        I netted a bit over that number. I have no other income. I want to gift half to someone.
        Other than letting the IRS know who got it, I will only have to pay taxes on what I keep and get $30 for, be it a share or 10,000?

    • Also assume the value of the shares gifted exceed the 12-13k gift exemption.

      • 1 Reply to maitlandhw
      • The gift recipient's cost basis and holding period are the same as the giver's, so the person to whom you give the stock would be on the hook for the capital gain. You also have a $5.25M lifetime gift exclusion in 2013, which will cover the amount exceeding the $14K annual gift exclusion in 2013. The gift and allocation to the annual versus lifetime exemptions must be reported to the IRS on Form 709 with your 2013 tax return. Obviously, use the annual exemption first to preserve as much of the lifetime exemption as possible.