m2m
Initiate Member
Joined: Dec 19, 2011 0:17:52 GMT -5
Posts: 81
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Post by m2m on May 13, 2014 22:12:05 GMT -5
xx shares of stock ABC owned by John and Jane in an investment account. Shares transferred to Joe and Joan's investment account in the same brokerage house. What is the Joe and Joan's cost basis?
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mwcpa
Senior Member
Joined: Jan 7, 2011 6:35:43 GMT -5
Posts: 2,425
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Post by mwcpa on May 14, 2014 4:45:33 GMT -5
"What is the Joe and Joan's cost basis?" the same as it was in the hands of John and Jane |
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m2m
Initiate Member
Joined: Dec 19, 2011 0:17:52 GMT -5
Posts: 81
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Post by m2m on May 14, 2014 12:04:32 GMT -5
Thanks MW. Would the transferred stock shares be considered a gift?
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mwcpa
Senior Member
Joined: Jan 7, 2011 6:35:43 GMT -5
Posts: 2,425
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Post by mwcpa on May 14, 2014 19:24:16 GMT -5
yes, the stock transfer would more than likely be a gift, unless the transfer was to satisfy a debt, then John and Jane would have a capital gain (on the difference between the FMV of the stock and it's purchase price) and Joe and Joan would have "basis" equal to the FMV of the stock.
Example...
A owes B $5,000. A owns XYZ stock worth $5,000, it has a cost basis of $1,000.
B accepts the XYZ stock in satisfaction of the debt.
A has a capital gain of $4,000. ($5,000 stock used to satisfy the debt less $1,000 cost). B has cost basis of $5,000 in stock XYZ. |
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