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Parent's capital loss to offset my capital gain?

Can I use a family member's capital loss to offset my capital gains?

Due to stock market investment losses, my parent currently has a capital loss carryover of approximately $1 million.  On the other hand I currently own stock with an unrealized stock market gain of approximately $300,000.  If I gifted that stock to my parent, would he then be able to sell that gifted stock and use his $1 million capital loss to completely offset the capital gain from the sale and subsequently not pay any capital gains taxes on it?

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Sep 17th 2018 23:46

Hello -

The cost basis of stock received as a gift ("gifted stock") is determined by the giver's original cost basis and the fair market value (FMV) of the stock at the time the gift is given.

If the FMV when you give the gift is more the original cost basis, use the original cost basis when you sell.

If the FMV when you give the gift is less than the original basis, and your parents later sell the stock for:

More than the original basis, use the original basis.

More than the original basis but less than the FMV at the time of the gift, the selling price becomes the cost basis. Your parents won't report a gain or loss in this situation.

Less than the FMV at the time of the gift, use the FMV at the time of the gift.

Please let me know if I can be of further assistance.

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Sep 19th 2018 17:37

Hello! Just reaching out to see if the information was helpful and if you have any additional questions?

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