You paid $2,000 for shares now worth $10,000. Sell them and give cash, and you may owe about $1,200 at the 15% rate. Gift the shares to someone in the 0% bracket, and that same $8,000 gain can be taxed at $0 when they sell. The gain moves with the gift, and that cuts both ways.
Stock is up, and the recipient is in a lower bracket: gifting the shares often saves tax.
Stock is down: selling first usually wins. The loss is yours to claim, and it disappears in a gift.
The recipient is a child or a college student: check the kiddie tax and FAFSA first.
Compare gifting the shares vs. giving cash with your numbers
2026 figures verified November 1, 2026. 2027 limits not yet published by the IRS.
Gift the Shares or Give Cash? 2026 Tax Comparison
Your estimate
How to Gift Stock, Step by Step
You gift stock by moving shares from your brokerage account into an account the recipient owns, using your broker’s transfer form.
An adult needs their own brokerage account. A minor needs a custodial (UTMA/UGMA) account, and the titling must match exactly. Ask the recipient for their broker’s DTC number and their account number, then complete your broker’s gift or transfer form, often called a Letter of Authorization. Each broker has its own form. Transfers commonly take several business days; ask your broker for its timeline. The mechanics of account transfers are covered in Transfer Stocks Without Selling.
Adult or custodial? An adult recipient owns the shares outright the moment they arrive. A custodial account holds them for a minor under an adult custodian, and the child takes control at the age set by state law. A gift to a custodial account is final. Open the account first, because a transfer fails when the names or account type do not match the form.
What to move. Name the ticker and the exact number of shares. If you bought on different dates, ask your broker how to choose lots, because each lot has its own basis and purchase date. Choosing lots decides which gain or loss travels with the gift.
- 1. Recipient has the right account type, titled correctly.
- 2. Get their broker’s DTC number and their account number.
- 3. Submit your broker’s gift or transfer form, naming the shares and the number to move.
- 4. Fractional shares may not transfer and may be sold. Check with your broker.
- 5. Record the gift date and value (the mean of that day’s high and low), and keep it for any Form 709.
- 6. Send a basis letter: purchase dates, your cost basis, and the gift-date value. It helps prevent a CP2000 notice.
- 7. Start by mid-December for a 2026 gift.
- 8. For college or a newborn, 529 plans and Trump Accounts need cash.
- 9. Over $19,000 to one person, or splitting with a spouse: file Form 709 by April 15, 2027, and talk to a CPA.
So for your gift: get the recipient’s DTC and account numbers first, and keep a written record of the date and value.
The Cost Basis Your Recipient Inherits
A recipient generally takes your cost basis, and your holding period carries over with it (IRC §1015; see IRS Publication 551).
Worked example: you bought shares for $2,000 more than a year ago, and they are worth $10,000 on the gift date. The recipient’s basis is $2,000. If they sell at $10,000, the gain is $8,000, and it is long-term because your holding period tacks on.
Holding-period example. You bought the shares eight months ago and gift them today. The recipient’s holding period includes your eight months, so a sale five months after the gift is long-term (thirteen months combined). A sale the next week is short-term and taxed as ordinary income.
A good basis letter lists the ticker, the number of shares, each purchase date, your total cost for each lot, the gift date, and the gift-date value. Keep a copy for yourself.
Without the purchase records, the recipient may not be able to prove basis, and the broker may report the sale with no basis at all. That is how a CP2000 notice starts. Send a basis letter with every gift.
So for your gift: the recipient’s tax is built from your purchase price, so hand over your records.
Gifting a Losing Stock: The Dual-Basis Trap
If the shares are worth less than you paid, gifting them usually wastes the loss, because the recipient uses two different bases.
When the gift-date value is below your basis, the recipient uses your basis to measure a gain and the gift-date value to measure a loss. A sale between the two produces no gain and no loss.
One more detail: when the gift-date value is used as the basis, the holding period generally starts the day after the gift instead of carrying over (IRS Publication 550). Check this with a CPA before relying on it.
| Recipient sells at | Result | Why |
|---|---|---|
| $12,000 | $2,000 gain | Measured from the giver’s $10,000 basis |
| $8,000 | No gain, no loss | The sale falls between the two bases |
| $5,000 | $1,000 loss | Measured from the $6,000 gift-date value; the giver’s $4,000 loss is lost |
So for your gift: if the stock is down, selling first usually keeps the loss with you.
2026 Gift Tax Limits and When You File Form 709
You can give up to $19,000 per recipient in 2026 without filing a gift tax return, and filing a return is not the same as paying tax.
| Item | 2026 amount | Source |
|---|---|---|
| Annual gift exclusion | $19,000 per recipient, per giver | IRS Rev. Proc. 2025-32 |
| Gift-splitting (spouses) | Up to $38,000, elected on Form 709 | Form 709 Instructions |
| Lifetime estate and gift exemption | $15,000,000 per person | OBBBA |
| Non-citizen spouse annual exclusion | $194,000 (U.S.-citizen spouse: unlimited) | IRS |
| Kiddie tax | First $1,350 tax-free; next $1,350 at child’s rate; above $2,700 at parent’s rate | IRS Rev. Proc. 2025-32; Form 8615 |
| Long-term capital gains 0% / 15% | 0% up to $49,450 single, $98,900 joint, $66,200 head of household; 15% up to $545,500 single, $613,700 joint | IRS Rev. Proc. 2025-32 |
| Net investment income tax | 3.8% above $200,000 (single) or $250,000 (joint) MAGI | IRS |
| 2027 annual exclusion | Not yet published (projected $20,000) | Check IRS.gov |
A gift above $19,000 to one person means filing Form 709, usually with no tax due, since the excess reduces your $15,000,000 lifetime exemption. Gift-splitting requires Form 709 even when the gift is under $38,000. For gift-tax purposes, stock is valued at the mean of the day’s high and low trading prices (Treas. Reg. §25.2512-2). You cannot deduct a gift to an individual. Some states tax gains, and a few, such as Connecticut, have their own gift tax. Check your state.
Example: valuing the gift. On the gift date your stock traded between a low of $48 and a high of $52, so each share is valued at $50. A gift of 200 shares is worth $10,000, under the $19,000 exclusion.
Example: a gift over the limit. You give one child $50,000 of stock in 2026. The annual exclusion covers $19,000. The other $31,000 goes on Form 709 and reduces your $15,000,000 lifetime exemption to $14,969,000. You owe no gift tax, and the form is due April 15, 2027.
Example: gift-splitting. A married couple gives a child $30,000 of one spouse’s stock and elects to split it. Each spouse is treated as giving $15,000, under each $19,000 exclusion, but the election itself must be made on Form 709.
Gifts to a spouse who is a U.S. citizen are unlimited. Gifts to a non-citizen spouse are limited to $194,000 in 2026. Treat $20,000 for 2027 as a projection until the IRS publishes the official figure.
So for your gift: over $19,000, or splitting with a spouse, means Form 709 and a call to a CPA.
Who Pays Tax When the Stock Is Sold?
You pay no tax when you give the shares, and the recipient pays tax on any gain when they sell.
That is why the 0% bracket matters. Long-term gains stack on top of other taxable income. Example: a single recipient has $30,000 of taxable income before the sale. An $8,000 gain brings the total to $38,000, under the $49,450 single threshold, so the gain is taxed at 0%. The same gain sold by you at 15% costs about $1,200. Gains above the 0% band are taxed at 15%, or 20% at higher incomes, and the 3.8% NIIT can apply above $200,000 (single) or $250,000 (joint). Details are in Capital Gains Tax 2026.
When the gain passes the 0% band. Suppose the same single recipient has $45,000 of taxable income. Only $4,450 of the $8,000 gain fits under the $49,450 threshold. The other $3,550 is taxed at 15%, about $533. That is still less than the $1,200 you would pay, but it is not zero.
If the recipient is not in a lower bracket, gifting saves little or nothing, because the same rate applies to the same gain. Shares held a year or less, counting your time, are taxed as ordinary income when sold. Dividends paid after the gift are the recipient’s income.
So for your gift: the strategy works only if the recipient’s income leaves room in the 0% band.
Gifting Stock to a Child or Grandchild
For a child, the kiddie tax and financial aid rules can reduce the benefit of gifting shares.
Custodial accounts hold the shares for the child. See UTMA Isn’t a College Fund. The kiddie tax applies to children under 19, and to full-time students under 24 whose earned income does not exceed half their support. Worked example: a child sells shares with an $8,000 gain and no other unearned income. The first $1,350 is tax-free, the next $1,350 is taxed at the child’s rate, and the remaining $5,300 is taxed at the parents’ rate, about $795 at 15%. Gifting does not avoid the kiddie tax. On the FAFSA, a student’s own assets count more than parent-owned assets (studentaid.gov).
FAFSA. A custodial UTMA/UGMA account is generally reported as the student’s asset, and student assets count more heavily than parent assets (studentaid.gov). A parent-owned 529 plan is generally reported as a parent asset, which often counts for less. If aid matters, ask the school’s financial aid office how it treats each account.
Grandparents and parents. The $19,000 exclusion applies per giver, so one child can receive $19,000 from each grandparent and each parent in the same year.
| Account | Accepts shares? | Who controls it | Tax notes |
|---|---|---|---|
| Adult brokerage | Yes | The adult | Recipient owes tax on sale |
| UTMA/UGMA | Yes | Custodian, then the child at the age of majority | Kiddie tax; counts as the child’s asset |
| 529 plan | No, cash only | Account owner | See 529 article |
| Trump Account | No, cash only (verify current rules) | Per account rules | See Trump Accounts article |
| Trust | Depends on the trust | Trustee | Use an attorney |
So for your gift: for a child, run the kiddie tax and FAFSA numbers before sending shares.
Gift Now, Leave It in Your Estate, or Donate It?
The right move depends on who should end up with the gain, and whether the stock is up or down.
| Option | Recipient’s basis | Who pays tax on the gain | Deduction | Fits best when |
|---|---|---|---|---|
| Gift now | Your basis carries over | The recipient, when they sell | None for you | The stock is up and the recipient has a lower rate |
| Leave in your estate | Stepped up to value at death (see Inherited Stock Cost Basis) | Generally little or none on the built-in gain | None | You would hold for life anyway |
| Donate to charity | Not applicable | You generally avoid tax on the gain; the charity does not pay it | Possible if you itemize; see Year-End Tax Moves | The goal is to support a charity |
Gift now
Recipient’s basis: your basis carries over.
Who pays tax on the gain: the recipient, when they sell.
Deduction: none for you.
Fits best when: the stock is up and the recipient has a lower rate.
Leave it in your estate
Recipient’s basis: stepped up to the value at death.
Who pays tax on the gain: generally little or none on the built-in gain.
Deduction: none.
Fits best when: you would hold the shares for life anyway.
Donate to charity
Recipient’s basis: not applicable.
Who pays tax on the gain: you generally avoid tax on the gain, and the charity does not pay it.
Deduction: possible if you itemize.
Fits best when: the goal is to support a charity.
The same stock, three ways. You paid $2,000 and the shares are worth $10,000. Gift them, and the recipient takes your $2,000 basis: the $8,000 gain is taxed at their rate, $0 at 0% and about $1,200 at 15%. Leave them in your estate, and heirs generally get a basis equal to the value at death, so the $8,000 gain generally goes untaxed (estate tax is a separate question, and many estates fall under the $15,000,000 exemption). Donate them, and the charity receives $10,000 while you generally avoid tax on the $8,000 gain, with a possible deduction if you itemize. These are illustrations, and your goals matter as much as the tax.
Gifts made within 5 years of applying for long-term-care Medicaid can trigger a penalty period. Gifting is not a way around that rule. See Nursing Home / Medicaid and the Estate Planning Guide.
So for your gift: if you will hold the shares for life, compare the step-up before gifting.
The Year-End Deadline
For the gift to count in 2026, start the transfer by mid-December.
Transfers can take days, and a gift generally counts when the shares land in the recipient’s account. Confirm timing with your broker. A large gift can also be split across two years: one gift in December 2026 and one in January 2027, each using that year’s exclusion. The 2027 figure is projected at $20,000 until the IRS publishes it.
Example. You want to give your daughter $38,000 of stock. All in 2026 would exceed the $19,000 exclusion and need a Form 709. Instead, give $19,000 of shares in December 2026 and $19,000 in January 2027. Each falls under that year’s exclusion, assuming you gave her nothing else in those years, so no Form 709 is needed. The second gift is valued on its own gift date.
Common delays: names that do not match the account, a wrong DTC number, a missing signature on the form, and heavy December volume.
So for your gift: start by mid-December, or plan a January second half.
If You Received Stock as a Gift
You owe tax only when you sell, and the amount depends on the giver’s basis, so ask for the records.
Ask for the purchase date(s), the giver’s cost basis, the gift date, and the gift-date value. Report the sale on Form 8949 and Schedule D, using the carryover basis, or the dual-basis rule if the shares had lost value. If the basis is unknown, find old statements or ask the giver’s broker; with no records, the sale may be treated as having no basis, so see a CPA.
Example. Your aunt bought shares for $3,000, and they were worth $9,000 when she gave them to you. You sell for $9,500, so your gain is $6,500 (your $9,500 minus her $3,000 basis). It is long-term if her holding period plus yours exceeds a year. Your broker may show no basis, or the wrong one, so report your own figures. If the shares were worth less than her basis on the gift date, use the dual-basis rule.
So for your gift: if you are the recipient, get the basis letter before you sell.
FAQ
Can you gift stock to anyone?
Yes. The recipient needs an account that can hold shares: their own brokerage account if an adult, or a custodial UTMA/UGMA account if a minor. Shares cannot go into a 529 plan or a Trump Account.
How do I gift stock to a family member?
Get their broker’s DTC number and account number, then submit your broker’s gift or transfer form naming the shares. Send a basis letter with your purchase dates and cost basis.
Is gifting stock taxable?
Giving shares usually triggers no income tax for you, and no gift tax within the annual exclusion or your lifetime exemption. A gift above $19,000 to one person requires Form 709, normally with no tax due. The recipient owes tax on any gain when they sell.
Who pays the tax on gifted stock, the giver or the receiver?
The receiver pays tax on any gain when they sell, using your basis. You pay nothing at the time of the gift unless your lifetime gifts exceed the $15,000,000 exemption.
What is the gift tax limit for 2026?
$19,000 per recipient, per giver. Spouses can treat a gift as split, up to $38,000, by electing on Form 709. The 2027 figure is not yet published; $20,000 is a projection.
Do I have to file Form 709 if I gift stock?
Yes if you give more than $19,000 to one person in a year, and also if you elect gift-splitting, even under $38,000. It is due April 15 of the following year. Filing usually does not mean paying.
What is the cost basis of gifted stock?
Generally your basis (IRC §1015). If the value on the gift date was below your basis, the dual-basis rule applies: your basis measures a gain and the gift-date value measures a loss.
Does the holding period carry over?
Generally yes when your basis is used, so the recipient’s holding period includes yours (IRC §1223(2)). If the gift-date value is used as the basis, the holding period generally starts the day after the gift (IRS Publication 550).
What happens if I gift stock that has lost value?
A sale between the gift-date value and your basis produces no gain and no loss. A sale below the gift-date value gives a loss measured from that value. Your built-in loss cannot be used by anyone, so selling first usually keeps the loss with you.
Is it better to gift stock or cash?
It depends. If the stock is up and the recipient has a lower rate, shares can reduce the tax. If it is down, selling first usually wins. If both of you have the same rate, there is little difference. The tool above compares them.
Can I deduct a stock gift on my taxes?
No. There is no income-tax deduction for gifts to individuals. Donating to a qualifying charity is different; see Year-End Tax Moves.
How do I gift stock to a child?
Use a custodial UTMA/UGMA account and move the shares by transfer. Check the kiddie tax and FAFSA effects first. Gifts to a custodial account are final. A 529 plan takes cash only.
Does the kiddie tax apply to gifted stock?
Yes, when the child sells. In 2026 the first $1,350 of unearned income is tax-free, the next $1,350 is taxed at the child’s rate, and amounts above $2,700 are taxed at the parents’ rate. It covers children under 19 and some full-time students under 24.
Can I put stock in a 529 plan?
No. Contributions must be in cash (IRC §529(b)(2)). You could sell the shares first, which may trigger tax on any gain, or gift cash.
Is it better to gift stock or leave it in my will?
Leaving shares in your estate keeps control and generally gives heirs a stepped-up basis. Gifting now moves future growth and dividends to the recipient but carries over your basis. See Inherited Stock Cost Basis.
Can I gift fractional shares?
Some brokers cannot transfer fractional shares in a gift and may sell them, which could create a taxable sale for you. Ask your broker before you start.
When does a stock gift count for the year?
Generally when the shares are in the recipient’s account. Confirm with your broker. For 2026, start by mid-December. A gift completed on January 1 counts for 2027.
I received stock as a gift. What do I owe when I sell?
Tax on your sale price minus the giver’s basis, or the dual-basis result if the shares had lost value. It is long-term if the combined holding period exceeds a year. Report it on Form 8949 and Schedule D, and ask the giver for a basis letter.
Sources
- IRS Rev. Proc. 2025-32: 2026 annual exclusion, capital gains thresholds, kiddie tax amounts
- IRS Publication 551 (Basis of Assets) and Publication 550 (holding period, wash sales)
- IRC §1015, §1223(2), §1(g), §529(b)(2); Treas. Reg. §25.2512-2
- IRS Form 709 and Form 8615 Instructions
- Federal Student Aid (studentaid.gov): student vs. parent assets
This article is general information, not tax, legal, or investment advice. It covers federal rules only, using 2026 IRS figures verified on November 1, 2026. State taxes and your full situation can change the result. Consult a CPA or estate attorney for large gifts, gift-splitting, or trusts.
Daniel Hayes is the founder and sole researcher at AdvoraHQ. He covers U.S. personal finance, insurance, and consumer law — working directly from IRS publications, federal and state statutes, court opinions, and SEC filings rather than secondary summaries. His focus is the gap between what readers think they know and what the source documents actually say. Daniel is not a licensed attorney, CPA, or financial advisor; his articles are educational and not personalized advice. Reach him at Daniel.Hayes@advorahq.com.
