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Richard
Richard, Tax Attorney
Category: Tax
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Experience:  29 years of experience as a tax, real estate, and business attorney.
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I cashed in stocks and gave the money to my son as a gift.

Resolved Question:

I cashed in stocks and gave the money to my son as a gift. Do I report the amount on my 1040 as income and on the 709 gift tax form?
Submitted: 5 years ago.
Category: Tax
Expert:  Richard replied 5 years ago.

Good afternoon. You will report any gain on the sale of your stock on your Form 1040. Then, the gift should not generate any tax. Each donor can give $13,000 per year per person under the annual gift exclusion. In addition to that, each person has a $5,000,000 lifetime exemption....which means a person can give a cumulative amount of up to $5,000,000 in gifts without incurring gift tax....the donor must file a gift tax return (Form 709) to let the IRS know how much of the lifetime exemption is being used, but there will be no gift tax until cumulative gifts have exceeded the $5,000,000.

 

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Customer: replied 5 years ago.
I am still not sure about the reporting. The amount in question was sent to me on a 1099R form with no statement regarding losses or gains during the time the funds were invested.
Should I have received a statement reporting gains/losses over the investment period(s)?

Also the amount given was 100,000.00 so I am certainly over the amount for the year.
Expert:  Richard replied 5 years ago.

The 1099R only reports the amount of the total proceeds. Your gain is the proceeds less your cost basis in those stocks. You have to figure that amount and the difference is your gain or loss. Then, you will need to file the Form 709 in the amount of the total gift to your son in excess of $13,000...the first $13,000 will qualify under the annual gift exclusion.

Richard and other Tax Specialists are ready to help you
Customer: replied 5 years ago.
That I understand but should I not have received this from my investment manager?

Do I enter the amount on my 1040 as my income?
Customer: replied 5 years ago.
I understand the 1099R reports the proceeds, but should I have received a statement for the gains/losses?

Do I report the amount on the 1099R I received as income as well as on the 709 form?
Expert:  Richard replied 5 years ago.
You only report the gain....the proceeds less your basis (what the stock cost you to buy). This will be either long term or short term capital gain depending upon whether or not you held the stock 12 months or more. You will then report the gain on Form 8949 and Schedule D (Form 1040).
Customer: replied 5 years ago.
Thank you for you replies. I had held the stock for several years and I did not recieve the usual statement regarding the long term or short term gains.

So that I understand this correctly, I only enter the short/long term gain as income on my 1040, form 8949, schedule D. Will the 709 form reporting the balance offset what the 1099R shows that the IRS has received?
Expert:  Richard replied 5 years ago.

The Form 709 has nothing to do with the 1099R..the 1099R only relates to your personal income tax. The Form 709 only relates to the amount you give your son.

 

On Form 8949 and Schedule D, you show the total proceeds (as evidenced by the 1099R) and your basis, and the net is subject to capital gains tax.

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