Don’t Waste a Family-Member’s 0% Federal Tax Bracket

If you have a family member with low income, they may be able to pay no Federal tax when selling stock that has been held for over 1 year.  Assume you have a 25 year old child with little income and you have a large gain in a stock or security you hold.  Instead of selling the stock, paying tax on it, and giving the child money, consider gifting the appreciated stock or security to your child and having them sell it.  If you do, your child might be able to sell the stock, and recognize the gain at a 0% Federal Tax rate.  This strategy normally works with any family member who is older than 23 years old, but might work for some family members who are under that age.  Ask us how this applies to your particular situation.