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csanderson517
New Member

My wife just transferred a stock and cashed it out in september. The stock was under UTMA since 2002. However the UTMA was purchased by her grandfather who has since passed. Is this considered a gift or purchases herself? I am not sure how to file this. T

 
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TomYoung
Level 13

My wife just transferred a stock and cashed it out in september. The stock was under UTMA since 2002. However the UTMA was purchased by her grandfather who has since passed. Is this considered a gift or purchases herself? I am not sure how to file this. T

ASSUMING that stock was purchased in the UTMA by cash put into the UTMA by grandfather OR that grandfather owned the stock, established the UTMA and then transferred the stock into it, this stock was acquired as a "gift."

Parents and grandparents mean well when they do this sort of thing but don't understand the "downstream" problems they create by not documenting their basis and the FMV at the time of the gift, two things you certainly need if you're going to report the sale accurately.

You might try simply reporting the stock as a "purchase" with $0 as the basis.  If you happen to be in the lower two tax brackets this long term capital gain will be taxed at the federal level at $0, so it's not really worth your time to somehow develop the "correct" information.  Even if some of the gain is taxed at the next higher LTCG rate of 15% the impact may be small enough to justify not putting in significant time and effort trying to establish or estimate the correct information.

Tom Young

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