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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10131
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I bought some stock with my former girlfriend 19 years ago -

Customer Question

Hello! I bought some stock with my former girlfriend 19 years ago - it is in both of our names. I verbally gave it to her at the end of our relationship so I don't feel I actually own any of it (it is now worth substantially more). She called me up because she needs my signature in order to cash it out. I'm fine with that but I'm concerned that I will have some tax problems come up myself it she does that. If I sign the back of the check, will I be liable for the taxes on it?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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The "default" answer (if you don't do anything), would be yes. You as joint owner of record, would have a gain on your half of the stock.

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If she holds certificates, then the certificates are registered in your name too. If they're held in a brokerage account, they're in a joint account.

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What you need to do is GIFT the stocks to her in a way that can be recorded, documented.

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If it's in a brokerage account, or other custod***** *****ke a bank or trust company, they will have an ownership change form.

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If you have certificates that are registered with the company in your name, you should go to the company and ask who handles stock sales reissuance if certificates, etc. (or if it's a larger company, they may use a company called a transfer agent) and gift her the stock by having the shares reissued in her name only.

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Finally, if your hale is worth more than 14,000 then you'll need to do an IRS form 709 (Gift tax form) because the gift is over the annual gift tax exclusion ... BUT there'll be no actual gift tax owed by you because the lifetime gift/estate tax exclusion is $5,430,000.

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Hope this helps

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Lane

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...Please let me know if you have any questions at all.

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If this HAS helped, your positive rating … (by clicking or touching the stars or smileys on your screen) … would be thanks enough!That’s how we’re credited for the work here.

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Customer: replied 1 year ago.
Lane, thanks - that is really helpful. I did have two additional questions below. Mark- I found out that she has been getting dividends over the past four or five years. I'm not sure how she cashed the checks, but could I have a tax liability from those?- If I gift my half of the stocks to her, will I have to mention it at all on my taxes or do anything else? From your statement above, it sounds like I just need to be ready to prove it if I am audited but I wanted to make sure.
Expert:  Lane replied 1 year ago.

Hi Mark,

No, that's right ... you should just document in writing that the date of the gift was XX/XX/XX. in any way you can (i.e., notes, legend on the ownership change form, ideally, getting her to sign a simple statement that you gave the stock to her "upon xxx event," OR at least on xxxx date).

... Lane

Expert:  Lane replied 1 year ago.
Mark,
Did that help?
Let me know ...
Lane
Expert:  Lane replied 1 year ago.

Hi Mark,

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Did you see that answer to your follow-up?

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Need more here?

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If this HAS helped, your positive rating … (by clicking or touching the stars or smileys on your screen) … would be appreciated!That’s how we’re credited for the work here.

...

Thanks,

Lane