Subject:  capital gains questions
From:  Bob
Date:  Fri, 23 Jan 2004

Hi Michael!

1. On transferring (re-registering) a stock to another party, who is responsible for capital gains, if any?
   
   
2. If one is transferring the stock to satisfy a debt, what are the tax ramifications?

Thanks much,
Bob

Answer

Date:  Mon, 02 Feb 2004

Hello Bob,

1. I'm not sure I understand this question. If you make a gift of stock, the person who receives the stock is responsible for reporting any gain or loss when it is later sold.
   
   
2. If stock is transferred to satisfy a debt, it is deemed to be sold for the amount of the debt. The person who transferred the stock will report a capital gain or loss based on the amount of the debt as the sales price less the tax basis of the stock. The person who received the stock will have a tax basis in the stock equal to the amount of the debt.

Good luck!
Mike Gray

For answers to new questions, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight by filling out the form below.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.