what is my sons tax liability?

Question

i purchased 100 shares of stock $10 per share approx. 10 years ago, 3 years i gave the 100 shares to my son, tjhe stock price is $40 per share today, if he sells them today, what is his tax liability?

Answer 1

Your son's basis in the stock is your basis of $10. If he sells it, he will have a capital gain of $30 per share, or $3,000.

If he is over 18, he will owe a maximum of 15% capital gains tax on this amount. Depending on his other income, he may owe less or even nothing.

If he is under 18, then he will may owe a higher tax because of the kiddie tax. The kiddie tax imposes tax at the parent's rate for investment income over $1,700. So $1,700 would be taxed at his rate (maximum 15%), and $1,300 of his gain would be taxed at your marginal tax rate, or 15%, whichever is higher.

Answer 2

Assuming your son is over age of 16 for this answer. Since he held the stock for three years any gain would be long term. A hundred shares at $ 10 gives him a basis of $ 1,000.00. If he sells it today for $ 40 (for our figuring this is after commission price) he gets $ 4,000.00; and after his basis is subtracted he has long term gain of $ 3,000.00; which is subjected to 5% tax if he is in the 10% or 15% bracket. If said gain is his only income he will zero out any tax owed and be home free.

Answer 3

100 shares times $30 gain per share is $3000 gain minus selling commissions. His tax liability would depend on his marginal tax bracket, but wouldn't be more than 15% of the gain.

Answer 4

The first answer was good until he stated part of the gain could be taxed at your rate or 15%, whichever is higher. Your rate for long term capital gains is not more the $15%.

Answer 5

Good answer Ninasgramma.