Hi everyone! I'm wondering if anyone has been in a similar situation --
My mother's trust just purchased a house. My mother is selling her stocks to pay in cash. (She has retirement accounts that she does not want to touch.) I am co-trustee of her trust and trying to figure out how she can reduce taxes on the short-term gains from these sales.
I am in a much lower income tax bracket than her, so I figured it would make sense for her to gift me her short-term lots, so that I can sell them and take the much lower income tax hit. The realtor thought this was a good idea. (She will also be selling some of the long-term holdings herself because we'll be paying the same 15% rate on those)
She has a trust brokerage account at Schwab. I have my individual brokerage account at Schwab. She has gifted me stock positions via Schwab's online transfer self-service before, so we know what that process is like, and it is fast and easy. However, Schwab does not let you specify the exact lots (e.g., short-term lots) you want to transfer. I called Schwab and they said that I would need to fill out a "Move Your Assets" form and list the purchase date of each lot, the quantity, and the basis. This is very time consuming -- we're talking hundreds of lots here, many with just a quantity of 1 or less (yes, you can transfer fractional shares between Schwab accounts!).
So, to save time and possible errors, I was wondering if she could transfer ALL her positions to me. I would then sell the short-term lots, and write the checks to escrow company. Then transfer the long-term lots back to her so she can sell them as she pleases.
I understand that all these transfers may be considered gifts, which is fine for us as we are each well below the $13m lifetime gift threshold, and we would still file whatever amount is gifted this year.
Does this make sense? It seems like it would work fine, but I'm not sure if it's ok to gift and re-gift stocks like this for tax purposes?
(My mom will eventually get an accountant, but hadn't anticipated buying a house so soon, and now is all caught up in inspections so she hasn't yet had time to find one, and I do my own straightforward taxes so not very knowledgeable about these things)
Thanks for any advice or experiences.
My mother's trust just purchased a house. My mother is selling her stocks to pay in cash. (She has retirement accounts that she does not want to touch.) I am co-trustee of her trust and trying to figure out how she can reduce taxes on the short-term gains from these sales.
I am in a much lower income tax bracket than her, so I figured it would make sense for her to gift me her short-term lots, so that I can sell them and take the much lower income tax hit. The realtor thought this was a good idea. (She will also be selling some of the long-term holdings herself because we'll be paying the same 15% rate on those)
She has a trust brokerage account at Schwab. I have my individual brokerage account at Schwab. She has gifted me stock positions via Schwab's online transfer self-service before, so we know what that process is like, and it is fast and easy. However, Schwab does not let you specify the exact lots (e.g., short-term lots) you want to transfer. I called Schwab and they said that I would need to fill out a "Move Your Assets" form and list the purchase date of each lot, the quantity, and the basis. This is very time consuming -- we're talking hundreds of lots here, many with just a quantity of 1 or less (yes, you can transfer fractional shares between Schwab accounts!).
So, to save time and possible errors, I was wondering if she could transfer ALL her positions to me. I would then sell the short-term lots, and write the checks to escrow company. Then transfer the long-term lots back to her so she can sell them as she pleases.
I understand that all these transfers may be considered gifts, which is fine for us as we are each well below the $13m lifetime gift threshold, and we would still file whatever amount is gifted this year.
Does this make sense? It seems like it would work fine, but I'm not sure if it's ok to gift and re-gift stocks like this for tax purposes?
(My mom will eventually get an accountant, but hadn't anticipated buying a house so soon, and now is all caught up in inspections so she hasn't yet had time to find one, and I do my own straightforward taxes so not very knowledgeable about these things)
Thanks for any advice or experiences.
Statistics: Posted by retireddog — Fri Aug 23, 2024 4:26 am — Replies 2 — Views 295