Q:

Subject: Capital Gains Taxes Aren't for the 'Kiddies'

Let me see if I understand this in a real world application:

My 80-yr old mother, living on welfare, needs to pay for something (home repair, what have you) but doesn't have the money (say $5,000).

I could sell some stocks and give her the money, but we'd both be better off if instead of giving her the money I gave her the stocks that she could then sell.

Sound right?

A:

Decisions like this would obviously be on a case by case basis.  However, if you have highly appreciated assets, such as stocks, that would trigger a large capital gain tax, shifting that tax to someone in a lower tax bracket could result in some tax savings. 

This obviously needs to be balanced out with the hassle and cost of transferring the title to the asset, as well as the possible cost and hassle of having to prepare Gift Tax returns if the total current fair market value of gifts to any one person during a calendar year exceeds $12,000.

Kerry

Follow-Up:

Oh.  I forgot to mention it was merely a hypothetical.  I wasn't seeking actual advice.

I knew something was off from the article.  Apparently it was that the writer never mentioned the cost of transferring title to the assets.

Labels: Gifting

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 5/27/2007 12:31:00 PM Send this post: