I think I may have asked this once before.. Or at least wanted to. I know absolutely nothing about this stuff.

My father has some stocks that he got from an employer back in the mid 60s. For the last few years he's mentioned that he wants to transfer them to me (before it gets too late). I was concerned about tax implications or penalties. I assumed I'd have to pay some fee or tax on it. When I started to look into it, I thought I read that I wouldn't have to pay anything, but that he would? But I have no idea to whom or how much?

I was hoping someone knew a little something and could share.
The other option for him would be to sell the stock. When I looked into transferring it I found it was worth more than he thought it was. Again I know nothing about how that works or what his tax liability would be on that.


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Lots of variables in this scenario to consider. Cost basis of the stock he owns, current value, amount he would like to gift, gift and potential capital gains taxes....

Not all that cut and dry but have a conversation with him about exactly what he's looking to accomplish and consider consulting with a trusted advisor (if he/you have one) or a CPA to address the "what-if(s)".

This is a question best answered by an estate attorney and or a tax attorney in your area.

It may serve you better to put the stock into a trust and let it transfer to you upon his passing but your dad can still benefit from it during his lifetime.

I am far from an expert on this. Several years ago I transferred some stock to my son. As far as I know, there are no tax complications until the stock is sold. If you are the owner, then you pay the tax. Be sure you know what your father's tax basis is for the shares, i.e. original value or price.

Give at death.

Look up Stepped up cost basis.

Any member of the New York Stock Exchange can help you.

The transfer is done by a transfer agent, usually a great big bank or trust co, headquartered in New York, stock is a publicly traded fairly large one.

When I transfer stock in my company from me to my sons, the secretary takes in the old certificate, verifies the authenticity of the signatures on the transfer, cancels it, issues a new one in the new name and registers it on the company shareholder record.

Call the company, or look online to see if you can find the transfer agent.

It might be faster, and cheaper, if you have the cash, to sell the shares and buy new ones simultaneously.

The tax is on the difference between basis, usually the purchase price, and the selling price, at capital gain rates.

quote:

Originally posted by Skins2881:
Give at death.

Look up Stepped up cost basis.

This is definitely what you want to do if there is no urgency to the transfer. Say he paid (or they were worth) $1/share when he got them. Say they are worth $10/share now. If he sells them, he pays capital gains tax on the increase of $9/share. The money left after taxes he gifts to you. But there could be a gift tax depending on the amount.

If he leaves them to you in his will, and they are valued at $10/share at that time, your "basis" is now $10/share. If you sell them the next day for $10/share, you pay no tax. And it's unlikely that there would have been any inheritance tax, unless it was a very large estate.

You did mention he wants to give them to you "before it's too late". I don't know what that means, or if you want to share more.

quote:

Originally posted by Skins2881:
Give at death.

Look up Stepped up cost basis.

This sounds like the right answer unless it is a very large estate, complicated by other beneficiaries, or other special circumstances. Just make sure you are named as the beneficiary.
If you are talking about real money, pay a CPA or tax attorney for an hour of their time to discuss and point you in the right direction.

quote:

Originally posted by Southflorida-law:
This is a question best answered by an estate attorney and or a tax attorney in your area.

There are many factors and the above mentioned attorney can make sure you consider all of them.

It is possible for you dad to make a gift in excess of the annual limit and file a gift tax return so that it counts against his lifetime giving limit (generally the estate tax exemption amount) rather than any gift tax being due now.

If your dad’s wife is living, they can each give the annual limit. If you are married, the two of them can give the two of you four times as much tax free as he can give you in any year.

There is a step-up in basis for things you inherit. This would reduce your tax due on sale of the asset.

A living trust allows the grantor to enjoy the assets during their lifetime, then have them be disbursed as directed by the trust without going through probate. This insures a lot more privacy (Dad’s assets and who they are going to isn’t discussed or argued in open court) and can save significant money (probate ain’t cheap, with the lawyer handling payed a percentage of the assets of the estate according to a schedule).

Then there may be the consideration that your dad wants you to have it now and see you enjoy it.

Talk with your dad and see what his priorities are, then find a good estate planning lawyer to help him achieve his goals.

Let me chime in with something I picked up from several financial/retirement seminars that I attended.

Wills may go to probate which costs money.

Trusts if he doesn't already have one costs money to set up.

Statement of beneficiaries which are executed upon death doesn't cost anything other than to file it with the institution.

For stocks and such, the wording is "Transfer upon death" and for straight money (I suppose it also applies to LGBT money), the wording is "payable upon death." The statement can be as complicated or as simple as you want in terms of beneficiaries. If more than one beneficiary, you have to specify that in the event of one beneficiary dying before the benefit is executed where does his share go to: Split up among the remaining beneficiaries or to go to his descendants.

You just have to make sure the statement makes sense and that the total adds to 100%.

Beneficiary statements take precedence over wills as these seminars taught me.

It's funny... he wants to give them to me because he doesn't want the hassle at tax time of paying tax on the dividends I guess. (which yes doesn't make any sense)

He doesn't want them being forgotten about when he dies, or going to whomever... the company, the state, or his wife. I think that's part of it, he wants it done quietly before then.

I logged into the website/account of the company that handles/manages them last night (Wells Fargo) and there's two different stocks (varying numbers of each) One worth about $650.00, the other over $58k. (which was a shock to me, I'd always figured it was a couple grand at most.)

I don't believe that there is any way around paying more in taxes if he gives it to you now. The gift tax can be avoided, but if he gifts it to you now, your basis will be whatever his basis was-presumably much lower than the current value.

BUT, a bird in the hand...

If he wants to give it to you now, then graciously accept, do the transfer, and don't worry about the taxes.

quote:

applies to LGBT money

They have their own currency now?

quote:

Originally posted by cas:
It's funny... he wants to give them to me because he doesn't want the hassle at tax time of paying tax on the dividends I guess. (which yes doesn't make any sense)

He doesn't want them being forgotten about when he dies, or going to whomever... the company, the state, or his wife. I think that's part of it, he wants it done quietly before then.

I logged into the website/account of the company that handles/manages them last night (Wells Fargo) and there's two different stocks (varying numbers of each) One worth about $650.00, the other over $58k. (which was a shock to me, I'd always figured it was a couple grand at most.)

It would be much better to inherit the stock. Read the link posted above about "stepped up basis". If he gives it to you, you will still have the unrealized cap gain. If you inherit it, you will likely have zero cap gain. Meanwhile, your dad can deposit the shares in a brokerage account and add you as POA. Agree you should consult with a CPA and estate atty. You should try to avoid paying cap gains tax. Of course it is worth reviewing if the stock is a good one to hold long term going forward. Get a referral to a good fee-only advisor for that opinion. Be sure that person has been in business for 20 years at least. Anyone in the business for 9 years or less has never experienced a bear market. Some here may also be able to give some color.

If he transfers them to you, your cost basis, for figuring your capital gains tax liability, will be what he paid for them in the mid-60s.

That's 50 years of appreciation. Since 1965, the S&P 500 has almost quadrupled, and most likely so has your father's stock.

So, if the stock is $58k now, say it was $20k in the 1960s when he bought it. If he transfers it to you and you sell it right away, the $38k of short term capital gain will be added to you taxable income. If you wait a year and then sell, the $38k will be a long term capital gain and taxed at that rate.

The actual tax rates depend on the new tax law.

quote:

Originally posted by mikeyspizza:
If he transfers them to you, your cost basis, for figuring your capital gains tax liability, will be what he paid for them in the mid-60s.

That's 50 years of appreciation. Since 1965, the S&P 500 has almost quadrupled, and most likely so has your father's stock.

So, if the stock is $58k now, say it was $20k in the 1960s when he bought it. If he transfers it to you and you sell it right away, the $38k of short term capital gain will be added to you taxable income. If you wait a year and then sell, the $38k will be a long term capital gain and taxed at that rate.

The actual tax rates depend on the new tax law.

If he bought it in the 60s the basis is likely much lower than 20K. I bet 5K or less.

quote:

Originally posted by mikeyspizza:
If he transfers them to you, your cost basis, for figuring your capital gains tax liability, will be what he paid for them in the mid-60s.

How does that even work? Meaning how does anyone know at this point what that was? He got the stock as part of some employee profit sharing deal (he didn't "buy" it). He doesn't have the actual stocks and says he doesn't think he ever had them.



He worked for AiResearch (Garret) which was bought by Signal, which became Allied Signal... and somewhere along the line they bought Honeywell Aerospace but kept the Honeywell name. So they're Honeywell stocks.

quote:

Originally posted by cas:

quote:

Originally posted by mikeyspizza:
If he transfers them to you, your cost basis, for figuring your capital gains tax liability, will be what he paid for them in the mid-60s.

How does that even work? Meaning how does anyone know at this point what that was? He got the stock as part of some employee profit sharing deal (he didn't "buy" it). He doesn't have the actual stocks and says he doesn't think he ever had them.



He worked for AiResearch (Garret) which was bought by Signal, which became Allied Signal... and somewhere along the line they bought Honeywell Aerospace but kept the Honeywell name. So they're Honeywell stocks.

If he has no records, a CPA will likely do a "best efforts" estimate, based on when he/you believe the stock was purchased. Any scrap of data will help with this estimate. My inlaws own T stock they inherited initially worth 1.5K and today it is 200K.

I will say again, it is much better to inherit the stock. That solves the cost-basis problem.

[/QUOTE]

How does that even work? Meaning how does anyone know at this point what that was? He got the stock as part of some employee profit sharing deal (he didn't "buy" it). He doesn't have the actual stocks and says he doesn't think he ever had them.

[/QUOTE]

If you inherit them it won't matter as your cost basis will be at the time of his passing, not when he got them decades ago.

Right. Inherited assets have a stepped up cost basis. Otherwise, it is a "best efforts" estimate. Consult with a tax advisor.