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Making Gifts of Company Stock

Making Gifts of Company Stock

July 13, 2023

How far can you go in your gift ideas? For most people, a box of chocolates or a bottle of wine will suffice. But what if you want to be more creative and give something that stands out? That’s where making gifts of company stock comes into play. Not only can you transfer wealth while retaining ownership, but it also offers potential tax savings.

You can give your company stock for estate planning purposes, such as passing assets to family members. Charitable giving is another popular use of company stock, and you can get a tax benefit for donating shares to qualified charities.

Understanding the Basics of Gifting Company Stock 

Company stock gifts entail transferring a portion of your company’s stock to someone else. You can gift stock to family members, friends, or charities.

Before you give away company stock, it’s important to understand the basics, including the legal and tax implications. Gifting can have serious tax ramifications if done incorrectly. As always, it’s advisable to consult a lawyer or financial professional before proceeding.

When gifting stocks, there are two main ways to do it: giving the stocks outright or transferring the stocks through a trust. Outright gifts are immediate, while trusts can help you manage how much the recipient will receive over time.

The tax rate on capital gains depends on how long you have held that stock. Short-term gains — less than a year — are subject to your regular income tax rate, while long-term gains are taxed at lower capital gains rates. Any gifts above the annual limit will be subject to capital gains and gift taxes.

How to Make Company Stock Gifts  

The first step is to select a recipient for the gift. You can choose family members, friends, charitable organizations, or trusts as your recipient. Next, you should decide how much stock to give away. This will depend on your financial situation and the recipient’s needs.

Once you have selected a recipient, it’s time to transfer the shares. You can do this through a broker or a bank. You must also notify the company of your intention to transfer.

Finally, you should file any relevant tax forms, such as form 709, for gifts over the annual limit. Filing the necessary documents can come in handy when it’s time to file your taxes.

Using trusts to gift company stock has numerous advantages over outright gifts. Trusts can help you transfer wealth while managing how much and when the recipient will receive ther gift. Also, a trust can be a uself tool when looking to protect assets from creditors or potential lawsuits.

Conclusion

Gifting company stock can be a great way to transfer wealth and save on taxes. When done correctly, gifting company stock can provide numerous benefits. Not only can it help you save on taxes, but it can also be a great way to show your appreciation by passing down your wealth.

So why not explore this option as part of your gift-giving strategy? And if you need advice or guidance about any legal and tax implications, don’t hesitate to consult a financial professional or tax professional.

Disclaimer: Neither MML Investors Services nor any of its subsidiaries, employees or agents are authorized to give legal or tax advice. Consult your own personal attorney, legal or tax counsel for advice on specific legal and tax matters.

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