Several years ago Doug invested $21,000 in stock. This year (2017) he gave his daughter Tina the stock on a day it was valued at $20,000. She promptly sold it for $19,500. Assume Doug is not married and does not support Tina, who is 28.
Required:
a. Determine the amount of the taxable gift.
b. Calculate the amount of taxable gain or loss, if any, for Tina.
Answer
A.
Amount of taxable gift:
| Doug made a current gift of | $20,000 |
| Less:annual exclusion for 2017 | $14,000 |
| Taxable gift | $6,000 |
Totally separate from the lifetime gift exemption amount is the annual gift tax exclusion amount. It's $14,000 for 2017.
B.
Amount of taxable income or loss:
| Stock carryover basis | $20,000 |
| Sale price | $19,500 |
| Taxable Loss | ($500) |
There would likely be no gift tax due unless Doug has used her entire unified credit. Tina takes a carryover basis in the property (plus the gift tax paid, if any, on the appreciation).
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