Do you pay Capital Gains Tax on gifted shares?
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The recipient of a gift does not pay tax on any gift valued at $11,000 or less, no matter if it is a boat, car, cash, or stock. This means you don’t owe taxes at the time of the gift of the stock. When the recipient sells the stock, however, it is a taxable event.
Is gifting shares a taxable event?
Sale of shares, ETFs, mutual funds, etc received as a gift would be taxable under the head Income from Capital Gains . The recipient should file ITR-2 and pay tax at applicable rates. To compute the Capital Gains, Cost of Acquisition of the Capital Asset would be determined as the purchase price of the previous owner.
What is the cost basis of a gifted stock?
The cost basis of stock you received as a gift (“gifted stock”) is determined by the giver’s original cost basis and the fair market value (FMV) of the stock at the time you received the gift. If the FMV when you received the gift was more the original cost basis, use the original cost basis when you sell.
What is the holding period for gifted stock?
Gifts — Your holding period includes the time the person who gave you the shares held them. However, your basis might be the fair market value at the date of the gift. If so, your holding period of the gifted stock will begin the day after you received the gift.
How do I sell gifted stock?
Gifted stocks may be transferred using a brokerage account or through an estate planning strategy that involves completing a transfer on death (TOD) agreement. The cost basis for taxing gifted stocks depends on its fair value at the time of sale.
Can a company gift shares to an individual?
On receiving the gift: Gift of movable property such as shares, ETFs, mutual funds, jewellery, drawings etc without consideration and exceeding Fair Market Value of more than INR 50,000 is taxable in the hands of the recipient under Section 56(2) of the Income Tax Act.
Shares are considered as “movable property” for the purposes of the Income Tax Act, 1961, and it is not mandatory to execute a gift deed for this purpose. Upon completing the requisite transfer formalities, the gift itself is irrevocable.
Can shares of a company be gifted?
The transfer of equity shares offered as gifts happens through an off-market transaction, i.e. between depository and depository participant without involving stock exchange. Shares can be gifted only in the Demat since 1 April 2019.
Stocks can be given to a recipient as a gift whereby the recipient benefits from any gains in the stock’s price. Giving the gift of a stock can also provide benefits for the giver, particularly if the stock has appreciated in value since the giver can avoid paying taxes on those earnings or gains.
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