Capital Gains Tax
Have two minor aged (15/17) grandsons who I gifted 100 shares of stock each. I paid approx $30/share. The company was bought out and stock distributed at $62/share. The accounts have me as custodian and is in their social security numbers. Do they have to file a tax return and pay capital gains tax? Can’t I just say it was a gift? Do I have to pay capital gains tax? Thanks so much, love listening to you on the radio!
Terry Says
That was sort of a mistake on several counts. First, by putting the shares in a custodial account, the asset weighs 7x more heavily against them if they apply for financial aid!
Second, you should have an accountant deal with the tax issue. I assume from your question that the shares were sold? If so, yes, the kids each need to file a return and declare the capital gain — but the cost basis depends on your cost.
If the shares have not been sold, they will owe the tax when they finally do sell them.
Read this — all the way to the end! — for all the complicated details:
https://youngandtheinvested.com/how-to-gift-stock/
