Full question:
My mother has some stock in the form of certificates. She wants to give it to my two brothers and as a gift. In other words, she wants to split them up three ways and give them to us as a gift. Will my mother be taxed or will we be taxed on them when they are cashed in?
- Category: Gifts
- Date:
- State: Nevada
Answer:
The answer will depend in part on the amount of the income received from the shares. A transfer of a gift by an individual may be excluded from the federal gift tax if it isn't worth more than $13,000 in 2009. As a result of the 2009 annual gift tax exclusion, any person can give any other person up to $13,000 before the gift is subject to federal gift taxes. Also, in 2009 a couple may together make a combined $26,000 gift for tax purposes before there is a gift tax. The lifetime gift tax exclusion remains at $1,000,000.
However, the proceeds of stock shares that are owned by an individual are often subject to taxation when sold if there is a profit. The profit would be reported as income on the owner's tax returns. Therefore, the transfer may or may not be required to be reported on a gift tax return depending on the value of the shares involved and whether they qualify for the annual exclusion. Selling the stock may trigger income taxes depending on whether the difference in the purchase price and the selling price produces a profit.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
