If you’re considering gifts to family members in a lower tax bracket, giving long-term appreciated stock rather than cash can offer valuable tax savings. You may be able to eliminate federal income tax on the capital gains if the loved one is in the 0% tax bracket for long-term gains. The recipient can potentially sell the stock tax-free. But the 0% rate applies only until the gains fill up the gap between the recipient’s taxable income and the top of the 0% bracket. Before acting, make sure the recipient won’t be subject to the “kiddie tax” and consider gift and generation-skipping transfer tax consequences. We can answer any questions and suggest other ways to reduce taxes on investments.
