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.

Great question about documentation! You'll definitely want to get this sorted out before any issues arise. For gifted stocks, you need to provide your brother with records showing: 1) Your original purchase date and price (the donor's basis), 2) The fair market value on the date you gifted the shares, and 3) The date of the gift itself. If you don't have perfect records of your original purchases, your broker should be able to provide historical statements or cost basis information. Many brokers keep these records electronically going back years. You can also reconstruct basis using historical price data if needed - the IRS accepts reasonable approximations when exact records aren't available. I'd recommend creating a simple document for your brother that lists all this information for each stock lot you gifted. He'll need it for his taxes when he sells, and having it documented now will save both of you headaches later. The IRS loves good record keeping, especially for gift transactions that might get scrutinized.

This is such an important point about state taxes that often gets overlooked! I'm dealing with a similar cross-state situation where I'm in California (high state taxes) and considering gifting some tech stocks to my sister in Texas (no state income tax). California has its own rules about how they treat gifted basis, and I discovered that even though my sister lives in Texas, California might still want to tax me on the "constructive sale" if they determine the gift was primarily for tax avoidance purposes. The state-by-state complexity really adds another layer to what's already a complicated federal tax strategy. Did you end up going through with the gift to your nephew, or did the state tax complications make it not worth it? I'm curious how the PA-FL combination worked out in practice, since I'm facing a similar decision timeline and trying to figure out if the hassle is worth the potential savings.

This is a really insightful point about timing that I hadn't fully considered! You're absolutely right that gifting stocks with losses essentially transfers the timing control to the recipient, which could backfire if you need those losses now. I'm curious about one scenario though - what if you're approaching the $3,000 annual capital loss limitation? If you already have enough losses to max out this year's deduction, would it make sense to gift additional loss positions to family members who could use them more immediately? Also, regarding the family-wide tax planning approach you mentioned - are there any tools or strategies people use to model these multi-person, multi-year scenarios? It seems like the complexity could get overwhelming pretty quickly when you're trying to optimize across different tax brackets, state residencies, and timing preferences for multiple family members. The strategic timing issue you raised makes me think this type of gifting works best when you have a very clear understanding of both your and the recipient's tax situations not just for this year, but for the next few years as well.

This is extremely helpful, especially the clarification about the three possible outcomes with the dual basis rule! That "no gain, no loss" zone is something I definitely hadn't considered - it sounds like it could actually work against you if the stock price ends up in that middle range when the recipient sells. Your point about creating a formal gift letter is great advice. Even though it might not be legally required, having that documentation could save so much hassle down the road, especially if there are questions about timing or intent like you mentioned. I'm curious about your experience with the multi-state CPA consultation - was it worth the additional cost? I'm in a similar cross-state situation and trying to decide whether to invest in specialized advice or just proceed with general guidance. Did they identify any state-specific issues that would have been missed otherwise? Also, regarding the practical timing - how did you handle coordinating with the recipient about when they should sell? It seems like there needs to be some communication about tax strategy without creating the appearance of a pre-arranged plan that could trigger IRS scrutiny.

The multi-state CPA consultation was definitely worth it in my case - they caught a potential issue with my state's "throwback rule" that would have applied if the recipient state didn't tax the capital gain. Basically, my state would have still wanted to tax me on the transaction even though I'd gifted the stock. Without that specialized knowledge, I would have walked into a much larger tax bill. Regarding coordination with the recipient, we handled it by having very general conversations about their overall financial timeline and goals, without discussing specific tax strategies or sale timing. I simply explained the dual basis rules and let them make their own decisions about when to sell based on their needs. The key is avoiding any written agreements or promises about splitting tax benefits - keep the gift truly unconditional. One practical tip: I actually gifted the shares in smaller tranches over several months rather than all at once. This gave us both more flexibility and made the transaction look more like genuine family financial support rather than a coordinated tax strategy. It also helped spread out any potential gift tax reporting requirements across different tax years.