Can I gift someone stock shares with capital losses (or gains) for tax purposes?

Thanks for the explanation! I'm confused about the "dual basis" part. So if Dave sells the shares at $17000 (below the $19000 gift value but above the "no gain, no loss" threshold), would he actually have a loss or a gain to report? And is there a waiting period before he can sell or can he do it the next day?

If Dave sells at $17000, which is below the fair market value at the time of gift ($19000) but not below your original basis, he would have neither a gain nor a loss to report. This creates what tax professionals call a "no-gain, no-loss" situation in that middle range. There's no mandatory waiting period before Dave can sell the gifted shares. He could technically sell them the next day. However, if the IRS perceives the entire transaction as lacking economic substance and done solely for tax avoidance, they might challenge it under various anti-abuse doctrines. This is especially true if you and Dave are related or if there appears to be a prearranged plan where he immediately sells and you both split the tax benefit.

How does taxr.ai work with more complex situations? I have some restricted stock units from work that vested but are now underwater, and I'm wondering if gifting them to my parents might make sense since they're in a higher tax bracket.

I'm skeptical about these kinds of services. Couldn't you just get this info from a regular CPA? What makes it different from TurboTax or other tax software that already has these rules built in?

For complex situations like RSUs, taxr.ai was particularly useful because it analyzed the specific tax consequences at both ends - for me as the giver and my recipient. It accounted for holding periods, vesting schedules, and the different tax brackets involved. For your RSU situation, it would analyze whether the loss would be more valuable to you or your parents based on your respective tax situations. Regular tax software like TurboTax is great for standard situations, but in my experience, it doesn't provide the same level of analysis for gift basis calculations or planning scenarios. What taxr.ai did differently was look at multiple years of tax implications and provide specific recommendations based on my complete financial picture, not just the current year's filing. The detailed documents they produced were also really helpful when my accountant needed to verify everything.

How does this Claimyr thing actually work? Do they just call the IRS for you or what? I'm confused about how they get you through faster than if you called yourself.

Yeah right. There's no way to "skip the line" with the IRS. This sounds like a scam that just takes your money and you still end up waiting forever. The IRS is notoriously understaffed.

Claimyr doesn't call the IRS for you - instead, they use a system that monitors the IRS phone lines and calls you back when it's about to be your turn in the queue. The technology essentially waits on hold so you don't have to sit there listening to the horrible hold music for hours. It's definitely not a scam. The reason it works is that their system can monitor multiple lines and put you into the shortest queue. The IRS has different wait times depending on which service center is handling calls, and their system figures out the most efficient path. I was skeptical too until I tried it - but speaking with an actual IRS agent who could access my specific file and answer my questions directly was worth it.

Does the kiddie tax apply to adult children too? Like if my son is 22 but still in college and I gift him some stocks with gains, would he get taxed at my rate or his?

The kiddie tax can indeed apply to adult children up to age 24 if they're full-time students and don't provide more than half of their own support. So for your 22-year-old college student son, if you gift him stocks and he sells them at a gain, that unearned income could potentially be taxed at your higher rate if it exceeds certain thresholds. For 2025, the first $1,250 of unearned income is tax-free, the next $1,250 is taxed at the child's rate, and anything above $2,500 would be taxed at the parent's rate. The exact amounts adjust yearly with inflation. This is definitely something to consider in your gifting strategy, as it might eliminate the tax advantage you were hoping to achieve.

Yes, the step transaction doctrine is definitely something to consider. I work in tax planning (not giving official advice here), and we typically recommend waiting at least 30-60 days between the gift and any sale by the recipient. The IRS can collapse the transactions if they believe it was pre-arranged. There's no specific statutory waiting period, but the longer the better to establish that these were separate decisions. Also important - don't have any written agreements about the recipient selling and giving you part of the tax benefit. That's a huge red flag.

Thanks for confirming this! Do you know if there are any specific documentation requirements for gifting stocks? My broker just had me fill out a transfer form but didn't mention anything about needing to document the original basis or anything for tax purposes. I'm worried because I didn't keep great records of when I originally purchased some of these shares, and I'm not sure how my brother will report the basis when he eventually sells them.

Documentation is crucial for stock gifts! You'll need to provide your brother with records of your original purchase date, purchase price, and the fair market value on the date of the gift. Without this information, he won't be able to properly calculate his basis when he sells. If you don't have the original purchase records, you can usually get them from your broker - they're required to maintain transaction records for several years. You can also check old brokerage statements or tax returns where you might have reported dividends from those shares. For the gift documentation, you should create a simple written record stating the date of the gift, number of shares, your original basis, and the fair market value on the gift date. This will be essential for both your gift tax reporting (if applicable) and his future capital gains/loss calculations. The IRS expects this documentation to support the "dual basis" rules that apply to gifted stocks with losses.