club_cafe: Re: marital bliss

iras1 on

Rip,

I can't believe you got one wrong. <g> If *appreciated* stock is given as a gift, the donor's cost basis is used for gain or loss determination. If the stock is worth *less than the cost basis* on the date of the gift, you use the original cost basis to determine a gain or the fair market value on the date of the gift to determine a loss. If the sales price falls between these two values, no gain or loss is reported.

Ira Smilovitz

In a message dated 8/23/2005 6:38:09 P.M. Eastern Daylight Time, ripwest@comcast.net writes:

<<Doesn't the cost basis change if the stock is a gift? >>

No, not if the stock is later sold for more than the donor's cost basis.
In that event, the basis in the hands of the donee is the donor's basis.
If the stock is later sold for a loss, the basis is the fair market
value at the time of the gift.

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