stock gifted to daughter/granddaughter

Submitted by Douglas Bauerband on Wed, 2013-06-19 00:56

a. If a client gifts stock to either his daughter or granddaughter, and they then sell it, do they go by the cost basis of the father/grandfather or the date it was gifted?

b. If you buy stock @ 10 per share and pay 100 and it splits…does the cost basis go from 10 per share to 5? each time it splits the cost basis get cut in half?

Thank you,
Douglas



Submitted by Alan - IRA critic on Thu, 2013-06-20 03:41

  • The rules are complex. See the explanation starting at the end of p 9 of Pub 551 attached: http://www.irs.gov/pub/irs-pdf/p551.pdf
  • With respect to the split, a 2 for 1 split results in the cost basis per share reduced by 50%.

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