You will have to pay capital gain on sale of your Mutual funds. To the extent the gain is long terms(funds held over a year) it will be taxed at 15%. You will have to determine the gain based on the sale price and the cost basis of the portfolio.
The money given to your son will be considered as a gift from you to him.
IRS allows you can to give up to $1,000,000 in gifts, total, in your lifetime, before you start owing the gift tax
. (This gift is not per (donee)person but its a per donor limit). So you can make gifts that are worth up to a million bucks during your lifetime without paying the gift tax. . Even if you do not owe a gift tax because you have not reached the $1,000,000 limit, you are still required to file this form if you made a gift that does not qualify as excludable. The IRS needs to keep a running tab of your $1,000,000 lifetime exemption.
Let me know if you have any question.
Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases.