GaryM wrote:
- quote -

You need to weigh the financial aid concerns vs. the tax concerns.

Tax-wise, when you gift stock, the recipient gets your cost basis and
holding period. If it's long-term gains to you, it's long-term gains to
your son after you gift it. So if he sells the stock and is in a lower
tax bracket than you are, the tax hit will be lower. At the moment
long-term gains are taxed at 15% max, so that's the most you'd save on
federal taxes (add in your state taxes as well). I'm assuming your son
isn't one of those "college at age 10" kids so there are no kiddie tax
issues to consider (over age 14, it's not an issue).

It being the end of the year, you could make use of one $11,000 gift in
December, and another next year, for a total of $22,000 gifted before he
starts school. If you gift more than $11k in a calendar year to any
individual then there are gift tax concerns. Payments for education -
made directly to the school - aren't counted against that $11k but a
gift of stock would be, even if eventually used for education costs by
your son.

Also, your son could spread the sale out partially in 2003 and 2004 if
that helps on the tax side of things (it might not).

That's the tax side, but you should call the college(s) your son is
interested in attending to see how financial aid might be affected by
the gift, if that's a concern to you. The expectation is that the
student's assets will be depleted at a much higher rate than the
parents'. The specifics depend on the school & the aid program so you'll
need to call them to find out.

-Tad

Have you reviewed the financial aid strategy, if you hold them it will be
figured as yours and supporting the household, giving it to the son it will
be expected to go entirely towards the tuition bill.

I would visit the college he intends to go to and sit down with the
financial aid department. Do not automatically assume that there is no aid
possible, let them tell you what is available. Even gifting it directly to
the college at the appreciated value could defer the tax.

"GaryM" <gary_marcos[at]yahoo.com> wrote in message
news:29562e9a.0311292309.101897a1[at]posting.google.com...
- quote -

My son will be attending college next year. I am in a position to
gift him stock which has appreciated. Is this a good strategy?

* Would he pay less in taxes when he sold it?

The situation would be that I would have had long term capital gains
on the stock. But does this transfer to him when I gift it? Or does
he have to hold it a year before getting that benefit? Or are there
other factors that would kick in, basically reducing or nullifying any
benefit?

Any thoughts would be appreciated!
Regards,Gary