Comments on: Gift Your Depreciated Stock Shares

By: Joe

Joe — Sun, 30 Mar 2008 19:38:41 +0000

Evan, being a JD/BS/Fin. Planner and all, please enlighten us. Why wouldn’t your client(s) be better off doing what Jim said — sell the stock at a loss, take the offset on taxes this year (if short term @ marginal tax rate) and give the cash. The recipient can then buy the IBM stock himself/herself and it would go up or down just the same. Giving depreciated stock seems pretty dumb.

By: Evan

Evan — Fri, 28 Mar 2008 13:41:51 +0000

I think you are missing the point of this great piece of advice. Disclaimer first: I am a director at a fee based Financial Planning Firm with a B.S. Economics and a J.D. – and do this daily.

This technique is used for those with estate tax “problems.” Lets say you have an estate worth approximately $5,000,000 – and you are allowed to give $12K/yr per recipient (doesn’t have to be family btw). If you have IBM stock “worth $12k” and you believe that IBM will go up in the LONG TERM. You can give it to that recipient (they get your tax basis!) – and hopefully 10 years down the line that $12K gift is really $18 – $24K OUT OF YOUR ESTATE.

By: Eli

Eli — Fri, 28 Mar 2008 01:44:18 +0000

I agree…it’s not worth the hastle. Nobody really gains. Like you said, sell the shares at a loss to offset your income and give the money away. The recipient can invest how he/she sees fit. Transaction fees are negligible these days.

By: Posco

Posco — Thu, 27 Mar 2008 19:28:29 +0000

It doesn’t make sense to me, either. And, while it’s generally true that long-term performance of the general stock market is positive, there’s no guarantee that one particular depreciated stock will rebound anytime soon — that depends a lot on which company’s stock it is! That would make a pretty bummer gift to receive.