Gifting stock –who pays gains taxes?
If you gift a stock that has been held for a long time and has gained a great deal, how is the gain affected?
Terry Says
The recipient of the gift takes YOUR cost basis! So you are giving capital gains obligations as well as the value of the stock!
But — under current law (and there is some discussion of doing away with this “step-up” in basis) –if you die owning the stock, then your beneficiary gets a new cost basis, which is the value on the date of your death. So no capital gains tax is paid, unless the recipient holds on to it and later sells it at a gain above the value on the date of your death.
