are gifts of stock taxable

Santiago

I recently received a gift of stock from a family member, and I'm unsure about the tax implications. Do I need to report this as income? How is the cost basis determined for tax purposes when I eventually sell the shares? I want to make sure I don't run into any issues with the IRS.

Nora

Gifts of stock aren't taxable to you as the recipient when you receive them. However, the original cost basis and holding period carry over from the giver. When you sell, you'll owe capital gains tax based on the giver's original purchase price, not the value when you received it.

Santiago

Nora That’s a relief! So if my aunt bought the shares at $10 and they were worth $50 when she gifted them, I’d only pay taxes on gains above $10 when I sell? That makes sense—thanks for clarifying the carryover basis rule.

James

The giver might need to file a gift tax return if the stock's value exceeds the annual gift tax exclusion ($18,000 in 2024). But as the recipient, you don’t pay taxes upfront. Just keep records of the giver’s cost basis to avoid headaches later when filing taxes after selling.

John

I went through this last year! The key is getting the giver’s purchase records—brokerage statements or trade confirmations. If they can’t provide it, you might have to use the stock’s value on the date of the gift as your basis, which could mean higher taxes when you sell.

Matthew

Be careful with low-basis stock gifts—the IRS watches for people trying to dodge taxes by gifting appreciated assets. If the giver’s original cost was super low, you could face a big capital gains bill later. Sometimes it’s better for them to sell and gift cash instead.

Sophia

If the stock has lost value since the giver bought it, your basis for loss purposes is the lower of the original cost or the value at gifting. This rule prevents "gifting losses" for tax benefits. Confusing, but important to know if the stock drops after you receive it!