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Stock valuation in unified credit

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stjamescity

Guest
My 87 yr old father has $800,000 in stocks & 4 children and has been advised to give each child $200,000 of stock and then $175,000 in cash in $10,000/yr increments. He has been told that the stock will be revalued to the current value at the time of gift & children will pay tax only on any increase from this revaluation when they sell it. I have read differently & think that we will pay capital gains tax based on his basis, not the revalued basis, but he has financial advisor telling him this. I think it better to have stock go through estate where it is revalued at his death. Who is correct? I am no financial advisor, but have read this. Please help before it is too late. He lives in Indiana. Thanks
 


R

Roger R

Guest
I THINK YOU ARE RIGHT.

For purposes of the $10,000 the market value of the stock governs. The stock retains his old and low basis when you sell it. Use bonds.

But look, this cries out for some estate planning as there are ways to beat estate tax with proper planning now. See a lawyer and not an insurance salesman. And act before year-end so he'd have both the 1999 and 2000 $10,000 deductions. Also, give assets to other family members as it is $10k per gift recipient.

 

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