• LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

Gift of mutual fund shares: What’s the basis?

by on
in Small Business Tax

Q. I transferred mutual fund shares worth $3,000 to my niece for her graduation. My basis was $2,500. If she sells the shares for $2,200, can she deduct the full loss? M.L.B., Silver Spring, Md. 

A. No. Normally, the gift recipient retains the same adjusted basis as the donor. However, if the fair market value of a gift is lower than the donor’s basis, the property’s basis for determining loss is its fair market value at the date of the gift. (IRC Sec. 1015(a)) That doesn’t apply in your case, so your niece’s basis is $2,500.
Therefore, your niece can deduct a $300 loss ($2,200 sales proceeds from $2,500 basis).
Tip: Costs of purchasing securities (e.g., commissions) are added to a donor’s basis to determine “adjusted basis.”

Like what you've read? ...Republish it and share great business tips!

Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...

We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.

The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.

" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/27466/gift-of-mutual-fund-shares-whats-the-basis "

Related Articles...

    No matches

Leave a Comment