He’d Bought the Same Stock Twice: How the Gift Works
A grandfather who bought shares in 2009 and 2023 chose the older lot when gifting 100 shares to his granddaughter. The move could shift the gain to her tax…
A grandfather who had bought the same stock twice chose shares from his 2009 purchase when he gave his granddaughter 100 shares, a move that could shift sixteen years of gains to her tax return. According to Yahoo Finance, she may owe 0% federal tax on a sale if her taxable income remains under $49,450.
The choice matters because brokerage accounts track separate purchases as tax lots, each with its own purchase date and cost basis. Selecting the older lot, which has the lower basis, moves more of the unrealized gain with the gift than transferring shares bought later.
The report’s example contrasts the 2009 shares with a second purchase in 2023. The grandfather gives away the older lot, while keeping the higher-basis 2023 shares. A gift of stock does not trigger tax on the gain for the donor, the report says; the recipient takes the donor’s original cost basis and holding period.
That can leave the recipient responsible for reporting the gain if she later sells. If she qualifies for the 0% long-term capital gains rate, the gain may be taxed at zero at the federal level. The threshold cited for a single filer in 2026 is taxable income of $49,450 or less.
Who may face the kiddie tax
The strategy depends on the recipient’s age and circumstances. Yahoo Finance says the kiddie tax can apply to children under 18 at year-end, as well as some 18-year-olds and full-time students under 24 whose earned income does not exceed half their support, if a parent is alive.
For those covered, unearned income above $2,700 in 2026 is taxed at the parent’s rate, according to the report. That can remove the expected tax advantage for a minor or qualifying student. The article identifies adults with low taxable income, including a grandchild early in her career or a retired parent, as recipients for whom the approach may work better.
The report also lists different 2026 income ceilings for other filing statuses: $98,900 for joint filers and $66,200 for heads of household. These figures are not interchangeable; the applicable threshold depends on the recipient’s filing status and taxable income.
Paperwork matters. The report advises donors to check the lot-level records for the purchase date and basis, give copies to the recipient and tell the broker in writing which lot to transfer. If the donor does not specify, the account’s default lot method may determine which shares move.
Yahoo Finance cites federal tax provisions for the carryover basis and holding period: 26 U.S.C. § 1015(a) and 26 U.S.C. § 1223(2). It also points to 26 CFR 1.1012-1(c) for identifying shares transferred from multiple lots, and says IRS Publication 550 repeats the gift basis rule.
The report says a gift valued at or below the 2026 annual exclusion of $19,000 per recipient avoids filing Form 709. A larger gift requires the form and uses part of the lifetime basic exclusion of $15,000,000, according to the article.
For older donors, Yahoo Finance notes another option: holding the older lot until death may allow heirs to receive a stepped-up basis under § 1014, potentially removing the gain accumulated over sixteen years. The report frames that as a consideration, not a universal choice, and says the transfer’s tax treatment turns on the lot selected, the recipient’s income and eligibility, and the gift’s value.
Source: finance.yahoo.com
