Short term or long term on gifted stock

[thetiff]

We were gifted stock in December and sold it almost immediately. The stock was originally purchased some time in the 90's, but I don't have the original date of acquisition. Is this stock considered short term or long term? 

[GeoffreyG · Accepted solution]

Dear thetiff:

If the stock was originally purchased in the 1990s, and you acquired it by gift, then it would receive long-term gain/loss treatment by you upon the sale.  Quoted directly from IRS Publication 17 is the following language:

Property received as a gift. If you receive a
gift of property and your basis is determined by
the donor's adjusted basis, your holding period
is considered to have started on the same day
the donor's holding period started.

If you go through the full TurboTax interview for entering stock sales, the program will ask you how you acquired the stock that you're selling, if you choose the "additional details" or "unusual information" option when you're making your primary data entry.  When you then subsequently select "gift," you should be accorded this tax treatment automatically.  Otherwise, if you're directly entering the stock sale without using the "additional details" option, simply determine your holding period manually, which in this particular case would mean selecting long-term as the holding period, based on the above guidance from the IRS.

Thanks for asking this important question, and good luck to you!

Regards

[atty-M]

TurboTax should ask this question, and does.