Tax Tip of the Week
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Fax: 856.667.3652
For the week of
September 4, 2000
Don't overpay your tax when you sell gifted stocks
You get different tax treatment when you sell property you
have received as a gift than for property you purchased yourself.
Let's assume you are selling publicly traded stocks for $10,000 that you received three months ago from your grandmother.
At the time of the gift, the stocks were worth $9,000. Let's also assume that your grandmother purchased the stocks
five years ago for $2,000.
There are two important tax aspects to be considered when you sell property. What is your cost (tax basis) and
how long have you owned the property (the holding period)? In the case of gifts, you take both the donor's basis
and his or her holding period.
You taxable gain on the sale of these gifted stocks will be $8,000 ($10,000 minus $2,000). And you will get the
preferable long-term capital gain treatment because you will be considered to have owned them for more than twelve
months (the required period for long-term treatment).
If this information seems contrary to the way you may have reported sales in the past three years, you can amend
your tax returns. Perhaps you have a refund due to you for having overpaid your income tax.
Please contact us. We are here to see that you
pay no more income tax than the law requires.
Click here to view previous tax tips.
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and current tax information.
The information contained in this site is of a general nature and should not be acted upon in your specific situation
without further details and/or professional assistance.
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