Stock hand-down is perfectly legal — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Stock hand-down is perfectly legal

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Q: For years, I've been giving away appreciated stock to my low-bracket children. I recently gave $11,000 worth of my C corporation stock to my daughter, who sold it. My CPA says this technique is not allowed. Is that correct? T.J., Virginia Beach, Va.

A: No. This technique is perfectly legal. You can give each family member up to $11,000 of stock each year without any gift-tax consequences. But you will face a drawback: Even though your daughter is in a lower tax bracket than you, her basis in the stock is your original cost—not the market value at the time of the gift. So your daughter could face a tax bill on the sale of the stock.

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