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tmonyhan69
New Member

How do i claim 1099-B as a gift- My husband was given a gift by his deceased grandfather some stocks or something, my husband cashed them in. Can we claim that as a gift? It was around $7000

 
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MargaretL
Employee Tax Expert

How do i claim 1099-B as a gift- My husband was given a gift by his deceased grandfather some stocks or something, my husband cashed them in. Can we claim that as a gift? It was around $7000

No, you cannot claim the stock sale as a gift.  Cash gifts are not taxable, but gifted property later sold (as is your stock) is subject to tax. 

  1. Federal Taxes 
  2. Wages & Income
  3. Investment Income
  4. Stocks, Mutual Funds, Bonds, Other - follow the prompts, you will be able to indicate that you received form 1099-B and enter information on your stock sale.

You will be asked additional information about the stock basis, which most likely is not listed on the form. You will have to find this on your own, using some old records if you have any, or you may use historical stock records. You would enter the date acquired as "various" since we know it is a long-term stock. If the cost basis is not reported to the IRS, you would select category F (long-term not reported).

Now... about stock basis: Cost basis for a gift is the same basis as that of the person who gave you the gift. If the item was sold at a loss, the basis is the fair market value on the date you received the gift. If the fair market value of the item is less than the donor's basis (his cost), and you sell it for more than fair market value, but less than the donor's basis, then you don't have a gain or a loss.  In other words, you must know the grandfather's stock's cost and the Fair Market Value when it was given.  If you do not have any records, try using  Marketwatch or Nasdaq. It's generally acceptable to take the lowest and highest price from a given day and average them to arrive at a cost.


NOTE: Reporting gifted stock basis is confusing... if you cannot determine the basis, you will have to enter  zero as your basis; you may actually enter it first (if you cannot figure out the basis) and see if you are subject to an extra tax... the reason I recommend this is because for 2016, the long-term capital gains tax rates are 0, 15, and 20 percent . If your ordinary tax rate is already less than 15 percent, you may pay zero percent long-term capital gains rate- which means you will not see a difference on your refund/ tax bill. You will not have any loss, but you won't pay tax on the gain either.

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4 Replies
MargaretL
Employee Tax Expert

How do i claim 1099-B as a gift- My husband was given a gift by his deceased grandfather some stocks or something, my husband cashed them in. Can we claim that as a gift? It was around $7000

No, you cannot claim the stock sale as a gift.  Cash gifts are not taxable, but gifted property later sold (as is your stock) is subject to tax. 

  1. Federal Taxes 
  2. Wages & Income
  3. Investment Income
  4. Stocks, Mutual Funds, Bonds, Other - follow the prompts, you will be able to indicate that you received form 1099-B and enter information on your stock sale.

You will be asked additional information about the stock basis, which most likely is not listed on the form. You will have to find this on your own, using some old records if you have any, or you may use historical stock records. You would enter the date acquired as "various" since we know it is a long-term stock. If the cost basis is not reported to the IRS, you would select category F (long-term not reported).

Now... about stock basis: Cost basis for a gift is the same basis as that of the person who gave you the gift. If the item was sold at a loss, the basis is the fair market value on the date you received the gift. If the fair market value of the item is less than the donor's basis (his cost), and you sell it for more than fair market value, but less than the donor's basis, then you don't have a gain or a loss.  In other words, you must know the grandfather's stock's cost and the Fair Market Value when it was given.  If you do not have any records, try using  Marketwatch or Nasdaq. It's generally acceptable to take the lowest and highest price from a given day and average them to arrive at a cost.


NOTE: Reporting gifted stock basis is confusing... if you cannot determine the basis, you will have to enter  zero as your basis; you may actually enter it first (if you cannot figure out the basis) and see if you are subject to an extra tax... the reason I recommend this is because for 2016, the long-term capital gains tax rates are 0, 15, and 20 percent . If your ordinary tax rate is already less than 15 percent, you may pay zero percent long-term capital gains rate- which means you will not see a difference on your refund/ tax bill. You will not have any loss, but you won't pay tax on the gain either.

lv1utr
Level 2

How do i claim 1099-B as a gift- My husband was given a gift by his deceased grandfather some stocks or something, my husband cashed them in. Can we claim that as a gift? It was around $7000

My son received a college fund from his grandparents.  When he started taking distributions on it, they sent out a 1099-B.   One of the Turbo tax questions was is this gifted, I answered yes and it didn't make him pay.  Last year, he had to pay out due to the 1099-B.  Is this right?  He shouldn't have to pay taxes on it because it was a gift from my parents.  If so I need to go admend his 2018 taxes to get back that money.

KarenM90
Level 11

How do i claim 1099-B as a gift- My husband was given a gift by his deceased grandfather some stocks or something, my husband cashed them in. Can we claim that as a gift? It was around $7000

Are you saying your son received funds in a regular investment account that his grandparents had designated was for his college expenses OR  that his grandparents put funds in a Qualified 529 Plan and your son is withdrawing funds from that plan?  Can you clarify?

 

I am assuming that he just received funds in a regular investment account since you indicate he had received a 1099B (he would have received a 1099-Q if he withdrew funds from a 529 College Savings Account.)

 

If it was a regular investment account he will need to pay tax on the difference between the sale price per share and his per-share cost basis for the stock.  His cost basis will be the lower of his grandparents' original cost of the stock or Fair Market Value.  Here is a TurboTax Help article that explains this calculation:  Basis of Stock Received as a Gift

 

Here are two links to additional details on tuition and 1099Q, if he taking distributions from a 529 Education Plan.  Information on 1099Q

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lv1utr
Level 2

How do i claim 1099-B as a gift- My husband was given a gift by his deceased grandfather some stocks or something, my husband cashed them in. Can we claim that as a gift? It was around $7000

Thank you, that answered my question

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