Does gifting a stock/crypto reset the long-term capital gains holding period?

I've been holding some tech stocks for about 15 months now and I'm planning to gift some shares to my niece for her college fund. She might need to sell them in about 6-8 months for her first semester expenses. I'm wondering if my long-term holding period (over a year) transfers to her when I gift the shares, or if the clock "restarts" when she receives them? Basically trying to understand if short vs long term capital gains is determined exclusively by the original purchase date or if gifting resets that clock. The tax implications are pretty significant since long-term rates are much better. Would hate for her to get hit with short-term rates if she needs to sell within a year of receiving my gift.

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19 comments

Ravi Patel

•8M

When you gift securities like stocks or crypto to someone, they actually inherit your holding period. This means the recipient gets to "count" all the time you owned the asset before gifting it to them. So in your specific case, since you've held the stocks for 15 months already, your niece would immediately qualify for long-term capital gains treatment when she sells them, even if she sells the day after receiving them. The holding period doesn't reset upon gifting. What does transfer to your niece is your original cost basis (what you paid for the stocks). This is important because the capital gains will be calculated based on the difference between the selling price and your original purchase price.

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Ravi Patel

•8M

Yes, that's correct. If you gift Bitcoin that you've held for 3 years to your brother, and he sells it 2 weeks later, he would qualify for the long-term capital gains rate because he inherits your 3-year holding period. This rule applies to virtually all capital assets including stocks, bonds, mutual funds, crypto, and even physical property like collectibles or real estate. The key thing to remember is that both the holding period AND your cost basis transfer to the recipient.

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Omar Zaki

•8M

Just wanted to share my experience with this exact situation! I was super confused about this last year when my dad gifted me some Apple shares he'd been holding since 2018. I needed to sell them about 3 months after getting them for a down payment. I ended up using https://taxr.ai to help figure out my situation because I was getting different advice from friends. The service analyzed my dad's original purchase documentation and my sale info and confirmed I qualified for long-term capital gains rates even though I personally only held the shares for 3 months. The tool even generated a report explaining how the holding period transfers with gifts that I could keep for my records. Saved me from potentially making a costly tax mistake!

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Omar Zaki

•8M

Yes, it definitely works for crypto gifts too! The service has specific options for handling crypto transactions including gifts. It helps you document the original purchase date and cost basis which is super important for crypto since exchanges don't always track that properly. The tool actually helped with both understanding the rules and preparing the right documentation for filing. I didn't just get generic info - it analyzed my specific situation and generated the proper forms. There's a free basic version that answers questions, but I ended up getting the report which does have a cost, though it was worth it for the peace of mind.

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CosmicCrusader

•8M

Update for anyone following this thread - I went ahead and tried taxr.ai for my crypto gift situation with my mom's Ethereum, and it was actually super helpful! The tool walked me through exactly what documentation I needed from her (original purchase dates and prices) and showed me how to properly report the gift. What I found most useful was that it gave me a clear explanation of the "dual basis rules" that apply to gifts where the value at time of gift is LESS than the original cost (which was the case for some of my mom's older crypto purchases). I had no idea this could affect my eventual gains/losses calculation. Definitely recommend if you're dealing with gifted investments!

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Diego Flores

•8M

If anyone is struggling to get through to the IRS about gift-related tax questions (like I was), I finally got answers using https://claimyr.com to connect with an actual IRS agent. I had been calling for WEEKS trying to get clarification on how to document the cost basis for some stocks my grandfather gifted me before he passed away. The service basically holds your place in the IRS phone queue and calls you when an agent is available to talk. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with confirmed everything about the holding period transferring and also helped me understand how to handle the situation where I was missing some of the original purchase documentation.

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Diego Flores

•8M

It took about 3 hours total, but I didn't have to stay on the phone that whole time. The service held my place in line and called me when an agent was about to be available. Much better than the 6+ hours I spent on previous attempts where I eventually gave up. I absolutely spoke with a real IRS agent. You can tell because they have access to your tax records once you verify your identity. The service just navigates the phone tree and holds your place in line - when you get connected, you're talking directly to the IRS, not any third party. I was skeptical too, but it's just a queuing service, not someone pretending to be the IRS.

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Sean Flanagan

•8M

I have to admit I was completely wrong about Claimyr! After seeing it mentioned here, I was super skeptical but decided to try it as a last resort since I needed clarification on some gifted investments from my late uncle. I got connected to an actual IRS representative in about 2 hours (without having to sit by my phone the whole time). The agent confirmed everything about the holding period inheritance with gifts and helped me understand how to document everything properly since I was missing some of the original purchase info. This was after trying for literally MONTHS to get through on my own. Would've saved me so much stress if I'd known about this sooner!

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Zara Mirza

•8M

Sure, here's an example. Say you bought a stock for $1000, and now it's worth $800 when you gift it. If the recipient later sells it for $900, they would actually have a $100 GAIN ($900 - $800), not a $100 loss ($900 - $1000) as you might expect. The basis for determining loss is the fair market value at the time of gift ($800) since that's lower than your original basis ($1000). But if they sell it for $700, they would have a $300 loss ($700 - $1000), using your original basis. It gets tricky in the middle ground, which is why documenting the value at time of gift is really important.

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Harper Hill

•2M

This is such great information! I'm actually dealing with a similar situation where my grandmother wants to gift me some mutual fund shares she's held for over 5 years. Based on what everyone's shared here, it sounds like I'd inherit her holding period, which is fantastic since I might need to sell them within the next year for graduate school expenses. One follow-up question though - does anyone know if there are any special considerations when the gift involves mutual funds versus individual stocks? I'm wondering if the dividend reinvestment over the years complicates the cost basis calculation at all, or if it's handled the same way as regular stock gifts. Also really appreciate the mentions of the various tools and services people have used - this stuff can get pretty complex and it's reassuring to know there are resources available when you need professional guidance!

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