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Don’t disguise company stock transfer as gift

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. I gave a long-time employee a gift of stock in 2014 valued at $10,000. Is this a problem? K.H, Phoenix

A. Probably. The IRS is likely to challenge a claim that the transfer of stock in your company qualifies as a gift under the annual gift tax exclusion. (The maximum exclusion for 2014 was $14,000. It stays that way for 2015.) Instead, the IRS may flag the “gift” as disguised compensation that is subject to both income tax and payroll taxes. Check with your tax pro for how you make amends.

Tip: It’s better to work out an arrangement providing stock as part of a compensation package.

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