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step-up basis for gift

 
 
csj
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      11-14-2003, 03:23 PM
I gave my niece $8000 worth of Microsoft stock (at market
value). I bought it originally for $4000. I understand I
dont need to pay capital gains tax. But what about her cost
basis?

Thanks,
Robert

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Arthur Kamlet
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      11-15-2003, 06:13 PM
csj <(E-Mail Removed)> wrote:

> I gave my niece $8000 worth of Microsoft stock (at market
> value). I bought it originally for $4000. I understand I
> dont need to pay capital gains tax. But what about her cost
> basis?


4000.

When you give someone appreciated property, their cost basis
and acquisition date is the same as yours.

__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH

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Don Priebe
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      11-15-2003, 06:13 PM
> I gave my niece $8000 worth of Microsoft stock (at market
> value). I bought it originally for $4000. I understand I
> dont need to pay capital gains tax. But what about her cost
> basis?


It's the $4000 you paid. Gifts carry on the original basis
and the original purchase date. Inheritances get the
stepped up basis at time of death and are always long term.

(There's a minor complication if the FMV at the time of the
gift was less than the original basis. But that doesn't
apply here.)

--
Don EA in Upstate NY

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Tempuser
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      11-15-2003, 06:13 PM
csj wrote:

> I gave my niece $8000 worth of Microsoft stock (at market
> value). I bought it originally for $4000. I understand I
> dont need to pay capital gains tax. But what about her cost
> basis?


As the FMV on the date of the gift exceeded the cost basis
in the hands of the donor, the donor's cost basis of $4000
transfers to the donee.

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Helen P. OPlanick EA
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      11-15-2003, 06:32 PM
> I gave my niece $8000 worth of Microsoft stock (at market
> value). I bought it originally for $4000. I understand I
> dont need to pay capital gains tax. But what about her cost
> basis?


Her cost basis is your cost basis.

Helen, EA in PA
Member of The Tax Gang
President, PA Society of Enrolled Agents
Campaigning for NAEA Board of Directors - Looking for YOUR vote

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Stuart O. Bronstein
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      11-15-2003, 06:51 PM
"csj" <(E-Mail Removed)> wrote:

> I gave my niece $8000 worth of Microsoft stock (at market
> value). I bought it originally for $4000. I understand I
> dont need to pay capital gains tax. But what about her cost
> basis?


Well, if you were alive when you gave it to her, her cost
basis is the same as yours.

Stu

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Paul
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      11-15-2003, 07:10 PM
"csj" <(E-Mail Removed)> wrote

> I gave my niece $8000 worth of Microsoft stock (at market
> value). I bought it originally for $4000. I understand I
> dont need to pay capital gains tax. But what about her cost
> basis?


Your cost basis is given to her with the stock, so her cost
basis is $4000.

--
Paul A. Thomas, CPA
taxman at negia.net

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MAT1040X
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      11-17-2003, 10:06 PM
> I gave my niece $8000 worth of Microsoft stock (at market
> value). I bought it originally for $4000. I understand I
> dont need to pay capital gains tax. But what about her cost
> basis?


Your niece "walks in your shoes" for purposes of cost and
holding period. You should give her your original purchase
information so that she can calculate her gain when she
sells it.

Mary Ann Thomas, EA in AZ

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