Gift of mutual fund shares: What’s the basis? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
  • LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

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

Get PDF file

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.”

Related Articles...

Leave a Comment

Previous post:

Next post: