Can You Gift Stock to Someone? What You Need to Know

Gifting stock involves transferring ownership of shares, serving purposes like financial support or estate planning. Understanding the associated tax implications and procedural steps is important for both the giver and the receiver.

Donor’s Tax Considerations

When gifting stock, federal gift tax rules apply to transfers of property without full payment. The Internal Revenue Service (IRS) provides an annual gift tax exclusion, allowing $19,000 per recipient in 2025 without incurring gift tax or requiring a gift tax return.

Gifts exceeding this amount count against the donor’s lifetime gift tax exemption, which is $13.99 million per individual for 2025. No gift tax is owed until cumulative lifetime gifts exceed this exemption. Married couples can double these amounts through gift splitting.

The fair market value of the gifted stock must be determined on the date the gift is made. This valuation is used to calculate whether the gift exceeds the annual exclusion and to track the portion that reduces the lifetime exemption. The value is typically the stock’s closing price on that date.

Gifts exceeding the annual exclusion require the donor to file IRS Form 709, the United States Gift (and Generation-Skipping Transfer) Tax Return. This form notifies the IRS and tracks the amount reducing the donor’s lifetime exemption. The filing deadline is April 15 of the year following the gift.

Recipient’s Tax Considerations

For the recipient, tax implications concern their cost basis and holding period. The “carryover basis” rule applies, meaning the recipient’s cost basis for the gifted stock is the same as the donor’s adjusted basis at the time of the gift. This basis is used to determine capital gains or losses when the recipient eventually sells the stock. For example, if the donor’s basis was $50, the recipient’s basis remains $50.

The recipient’s holding period includes the donor’s. If the donor held the stock long-term (over one year), the recipient inherits that long-term holding period. This is advantageous, as long-term capital gains are taxed at lower rates.

If the stock’s fair market value is less than the donor’s basis at the time of the gift, a special rule applies. If the recipient sells for a gain, their basis is the donor’s original basis. If they sell for a loss, their basis is the stock’s fair market value on the gift date. This prevents loss transfers from donor to recipient.

Preparing for the Stock Transfer

Before initiating a stock transfer, gather specific information and make decisions. The donor needs to compile information about the stock, including its ticker symbol, number of shares, and whether shares are held in a brokerage account or as physical certificates.

From the recipient, the donor needs their full legal name, current address, and Social Security Number or Taxpayer Identification Number. If the recipient has an existing brokerage account, their account details are needed. This information is needed for correctly identifying the recipient and facilitating the transfer into their account.

Determine the stock’s fair market value on the intended gift date. This valuation helps calculate potential gift tax implications for the donor. The closing price on the chosen gift date serves as this valuation.

Contact the donor’s brokerage firm to understand their requirements for gifting stock. Brokerages have their own forms and procedures for transfers.

Decide on the appropriate transfer method, such as direct electronic transfer between brokerage accounts, re-registering physical stock certificates, or gifting to a custodial account if the recipient is a minor.

Executing the Stock Transfer

Once preparatory steps are complete, contact the donor’s brokerage to begin the stock transfer.

This can be done through various channels, such as an online portal, a phone call to customer service, or an in-person visit to a local branch. The brokerage will guide the donor through their transfer protocol.

The brokerage will provide transfer forms. These forms require the donor to input information gathered during preparation, including their details, the recipient’s information, and the stock being transferred. Carefully and accurately filling out these forms is important for the transfer.

After completing the forms, the submission process varies by brokerage. This might involve mailing signed forms, submitting them electronically, or delivering them in person. Follow the brokerage’s instructions to ensure the transfer request is processed.

Upon submission, the donor should inquire about typical processing times and how to confirm completion. Brokerages provide confirmation once shares move from the donor’s account to the recipient’s. Both parties should verify completion by checking their respective brokerage statements or online account access.