How to handle capital gains tax on gifted stock & dealing with quarterly taxes after big sale

When you sell gifted stock, you inherit the original owner's cost basis. That means the difference between what your grandmother paid for it and what you sold it for is your capital gain. And yes, this is considered taxable income, but it's specifically "capital gains income" - not regular income. For quarterly estimated tax payments, the general rule is that you need to pay if you expect to owe $1,000 or more when you file. With a $38k stock sale, you'll likely exceed that threshold. You can make quarterly estimated tax payments using Form 1040-ES. The quarters are April 15, June 15, September 15, and January 15 of the following year. There's a "safe harbor" provision too - if you pay at least 90% of your current year tax or 100% of your prior year tax (110% if your income is over $150,000), you won't face penalties even if you end up owing more.

After struggling with a similar situation last year after selling some Tesla stock, I found this tax analysis tool at https://taxr.ai that saved me from making a huge mistake on my quarterly payments. You upload your stock sale documents and it tells you exactly how much to pay each quarter for estimated taxes. I was originally planning to just wait and pay it all when I filed next year, but the tool showed me I'd face an underpayment penalty of almost $800! It also explained the whole gifted stock basis situation I was confused about - turns out the cost basis was way lower than I thought which meant bigger capital gains.

Just wanted to follow up about that taxr.ai site... I decided to try it after my last comment and wow - it actually found a major error in how I was calculating the basis for some gifted Apple shares. Turns out I've been using the wrong basis method for years! The tool showed me the correct way to handle the stepped-up basis calculation and identified that I should have been using the donor's original purchase price, not the value when I received the gift. This saved me from a potentially huge headache since I was planning to sell these shares soon. The quarterly tax payment calculator was super straightforward too - it showed me exactly what dates to make payments and even generated the vouchers. Really glad I gave it a shot!

If you're trying to get clarification from the IRS about quarterly payments for capital gains, good luck getting through on the phone. I spent 3 hours on hold last month trying to ask a similar question. Finally found https://claimyr.com which got me through to an actual IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that for large capital gains like yours, you definitely need to make an estimated payment for the quarter when you sold the stock. They also explained that if this is your first time dealing with estimated payments, you might qualify for first-time penalty abatement if you do end up with penalties.

Well I'm literally eating my hat right now. I tried the Claimyr service yesterday after posting my skeptical comment. They connected me to an IRS agent in about 25 minutes (was told to expect up to 2 hours). Got exactly the info I needed about my own capital gains situation from last year's crypto sale. The agent even helped me set up a payment plan for the penalties I'd already accrued for not making estimated payments (oops). Saved me so much stress and now I know exactly how to handle things going forward. Never thought I'd be recommending an IRS-related service but here we are!

Just to add another perspective - don't forget that if you've already had taxes withheld from other income (like a regular job) that might be enough to cover your additional capital gains tax. The requirement is that you need to pay the LESSER of 90% of this year's tax OR 100% of last year's tax liability (110% if your AGI was over $150,000). So before you panic about quarterly payments, check if your regular withholding will meet either of those safe harbor provisions. I sold about $45k in stock last year and my regular withholding covered it because my previous year's tax bill was relatively low.

Has anyone used TurboTax for calculating and paying quarterly estimated taxes on capital gains? I'm in a similar boat as OP and wondering if its worth paying for.

Just went through this exact scenario last year when I sold some Microsoft stock my dad gifted me. One thing that really helped was keeping detailed records of everything - the original purchase date, price, and gift date. The IRS may ask for documentation to verify the cost basis, especially with older gifted stock. Also, don't forget about state taxes! Some states treat capital gains as ordinary income while others have preferential rates. Make sure you're calculating estimated payments for both federal and state if your state has income tax. For the quarterly payments, I'd recommend erring on the side of caution and making a payment for the quarter when you sold. Even if you end up overpaying, you'll get a refund when you file. Much better than dealing with underpayment penalties later!