Are gifts of stock taxable? A Guide

Are gifts of stock taxable?

Are gifts of stock taxable? This article answers that question for U.S. equities, explaining whether giving shares to another person creates a taxable event for the donor or the recipient, which taxes typically apply, and the reporting rules you should expect. Readers will learn the core federal tax principles, how basis and holding period transfer, special rules for spouses, minors, and charities, practical transfer methods, reporting steps (including Form 709), and simple planning points. If you want a secure place to custody or transfer shares and related crypto assets, consider Bitget Wallet for custody and Bitget exchange services for related trading needs.

As of 2026-01-17, according to IRS guidance and Form 709 instructions, the fundamental rules described below remain the governing principles for gifts of stock in U.S. federal tax law. Always confirm current dollar thresholds and limits with a qualified tax advisor or the IRS website.

Note: the phrase "are gifts of stock taxable" appears throughout this guide to help answer the question in multiple contexts and examples.

Definition and scope

A "gift of stock" means transferring ownership of shares of a company (publicly traded or privately held) from one person (the donor) to another person (the recipient) without receiving full market-value payment in return. Transfers can take different forms:

• In-kind transfer: the donor transfers shares directly to the recipient's brokerage or custodial account.
• Sale-and-gift of proceeds: the donor sells shares and gives the cash proceeds to the recipient (this is a sale, not a direct gift of shares).

Typical scenarios include:

• Family transfers (parents to adult children, gifts between siblings).
• Gifts to minors via custodial accounts (UGMA/UTMA) or trusts.
• Gifts to charities (qualified public charities, donor‑advised funds, private foundations with special rules).
• Estate planning transfers to reduce taxable estates or to move assets to beneficiaries during life.

This guide focuses on U.S. federal income, gift, and estate tax principles for equities. State tax and international cross-border rules can differ and are discussed later.

Basic U.S. federal tax principles

The short, plain answer to "are gifts of stock taxable" in U.S. federal tax law is:

• The recipient generally does not recognize taxable income when they receive a gift of stock.
• Gift-tax rules apply to the donor: large lifetime gifts may reduce the donor's lifetime exemption or create gift tax liability.
• Capital gains tax is deferred until the recipient later sells the shares; the recipient generally takes the donor's cost basis and holding period for determining gain or loss.

Put differently: receiving stock as a gift usually is not income to the recipient, but it may affect future capital gains tax when the recipient sells, and large gifts may require donor reporting and impact the donor's gift/estate tax position.

Gift tax (donor-side)

U.S. federal gift tax is primarily the donor's responsibility. Key points:

• Annual exclusion: donors may give up to an annual exclusion amount per recipient each calendar year without needing to file a gift tax return for that gift. This amount is adjusted for inflation from year to year. For example, the annual exclusion was $18,000 for 2024 (label the year when relying on a specific number).

• Lifetime exemption and estate-tax interplay: gifts that exceed the annual exclusion reduce the donor's lifetime gift-and-estate tax exemption. The lifetime exemption is indexed for inflation; for example, the exemption was approximately $13,610,000 per individual for 2024. Gifts beyond the remaining exemption can generate gift tax owed by the donor.

• Form 709: donors must file IRS Form 709 (United States Gift (and Generation-Skipping Transfer) Tax Return) to report taxable gifts for the year when gifts to any single recipient exceed the annual exclusion. Filing Form 709 is required even if no gift tax is due because the lifetime exemption covers the gift.

• Who pays: the donor is generally liable for any federal gift tax due. The recipient has no federal gift-tax obligation when receiving the gift.

As of 2026-01-17, these donor-side principles continue to govern gift reporting and taxation at the federal level; confirm current year exclusion and exemption amounts with IRS materials or a tax advisor before acting.

Income tax and the recipient

When a recipient receives stock as a gift, they typically do not report the transfer as taxable income on their federal income tax return. Exceptions are rare and generally arise only when the transfer is really compensation disguised as a gift (for example, transfers tied to a service arrangement) or subject to special inclusion rules.

Important points for recipients:

• No ordinary income on receipt: the act of receiving gifted stock generally does not generate ordinary income for the recipient.
• Record-keeping: recipients should obtain documentation from the donor or broker showing the gift date, the number of shares, and the donor's cost basis and acquisition date to support future tax reporting when the shares are sold.

Capital gains tax and basis/holding-period rules

When the recipient later sells the gifted stock, capital gains or losses are computed using special rules that rely on the donor's original cost basis and the fair market value (FMV) at the date of the gift. The general rule is that the recipient "carries over" the donor's basis and holding period for gains. There are three common scenarios:

1. Sale at a gain (sale price > donor's adjusted basis): the recipient uses the donor's cost basis to compute taxable gain and also uses the donor's acquisition date to determine short‑ or long‑term capital gains treatment.

2. Sale at a loss (sale price < gift-date FMV): if the recipient sells at a loss, the loss is generally measured by the sale price minus the FMV on the date of the gift (not the donor's original basis). This prevents taxpayers from harvesting losses that were already present in the donor's position.

3. Sale price between the donor's basis and gift-date FMV: if the recipient sells for a price that falls between the donor's basis and the FMV on the date of the gift, neither a deductible loss nor a taxable gain is recognized. The tax rules effectively split the band between basis and FMV.

Example language to remember: the recipient "inherits" the donor's basis for gain calculations but uses gift-date FMV as the floor for deductible losses. The recipient also inherits the donor's holding period for determining long-term versus short-term capital gains when a gain occurs.

Specific transfer scenarios and special rules

Tax outcomes can change based on the recipient type and how the transfer is structured.

Gifts to spouses and marital deduction

• U.S. citizen spouses: transfers between spouses who are both U.S. citizens are generally eligible for the unlimited marital deduction, which means gifts of any amount to a U.S.-citizen spouse are not subject to gift tax and typically do not require Form 709 reporting for gift tax purposes.

• Noncitizen spouses: special rules apply for gifts to a non-U.S.-citizen spouse. There is a limited annual exclusion amount for gifts to a noncitizen spouse (a higher annual exclusion specific to noncitizen spouses is adjusted annually). Consider special planning if you intend to make very large transfers to a noncitizen spouse.

Gifts to minors and custodial accounts

• UGMA/UTMA accounts: gifts to minors are often made through custodial accounts (Uniform Gifts to Minors Act or Uniform Transfers to Minors Act). The custodian manages the assets for the child's benefit until the age of majority set by state law.

• Kiddie tax: unearned income (including capital gains) in a minor's account may be subject to the "kiddie tax," which can tax a portion of the minor's unearned income at the parents' marginal tax rate rather than the child's lower rate. Recent rules and thresholds matter; check current kiddie tax parameters before gifting large, income-generating positions.

• Tax bracket effects: gifting appreciated shares to a minor may reduce overall family tax on future gains if the minor's tax rate is lower and kiddie tax does not apply or is minimal—but watch for the kiddie tax rules and state tax considerations.

Gifts to charities

• Public charities: gifts of appreciated publicly traded stock to qualifying charities are typically tax-advantaged for donors. In many cases, donors can deduct the FMV of the donated shares as a charitable contribution (subject to adjusted gross income limits and substantiation rules) and avoid recognizing the capital gain that would have arisen on a sale.

• Charity's tax position: many charities are tax-exempt and generally do not pay capital gains tax when they sell donated marketable securities.

• Documentation: donors should ensure the charity is a qualified 501(c)(3) organization and obtain a contemporaneous written acknowledgment for donations above certain amounts. Donors should also transfer the shares in-kind to the charity's brokerage account and not sell and give cash if they want the tax treatment for donating appreciated securities.

Gifting appreciated vs. depreciated stock

• Appreciated stock: gifting appreciated stock usually shifts the future tax on built-in gains to the recipient. If the recipient is in a lower tax bracket or is a tax-exempt entity (like a public charity), this can reduce the family or donor tax burden.

• Depreciated stock: gifting stock that has lost value generally is not optimal for the donor who wants to claim a loss—the donor would be the one able to claim the capital loss only if they sold the shares themselves before gifting. If the donor gifts depreciated stock, the recipient's basis and loss-deduction rules can limit the ability to realize the loss.

• Practical rule: if you want a deductible loss, sell the asset and claim the loss before gifting cash; if you want to avoid capital gains, donate appreciated shares in-kind to a qualified charity.

Estate planning: gift now vs. bequest at death

• Carryover basis for gifts during life: lifetime gifts generally transfer the donor's basis (carryover basis) to the recipient. That means unrealized capital gains stay taxable when the donee sells.

• Step-up in basis at death: assets that pass at death to beneficiaries typically receive a step-up (or step-down) in basis to the fair market value at the decedent's date of death (or alternate valuation date). A step-up eliminates the built-in capital gain for the beneficiary—this is a major difference between gifting during life and bequeathing at death.

• Trade-offs: lifetime gifting can reduce estate size for estate tax purposes and may shift future appreciation out of the donor's taxable estate, but it can preserve built-in gains for the recipient (no step-up). Deciding whether to give now or at death depends on exemption levels, estate-tax risk, and the beneficiary's tax situation.

Practical mechanics of transferring stock

Common transfer methods and operational steps include:

• In-kind transfer between brokerages: donors direct their broker to transfer shares to the recipient's brokerage account via the Automated Customer Account Transfer Service (ACATS) or similar internal transfer processes. The recipient's account details (account number, name, DTC instructions) are required.

• Transfer of physical certificate: if shares are certificated, the donor can endorse and transfer the certificate according to state and issuer procedures, often requiring medallion signature guarantees.

• Custodial accounts and trusts: gifts to minors or to trust structures require establishing the appropriate account (UGMA/UTMA or trust account) and following custodian/trustee instructions.

• Transfer-on-death (TOD or POD) designations: some brokerages allow beneficiaries to be named for nonprobate transfer at death; TOD is not a gift during life but can simplify transfers at death.

• Broker requirements and fees: brokers may require donor and recipient signatures, a letter of authorization, or a medallion guarantee; some brokers charge transfer fees. Check both the donor's and recipient's broker rules.

• Documentation: obtain written confirmation of the transfer date, the number of shares transferred, and any cost-basis information the broker can provide. This documentation is essential for future tax reporting by the recipient.

If you prefer integrated custody and wallet solutions for related crypto or tokenized assets, consider Bitget Wallet for custody and Bitget services for exchange-related needs. Bitget can help streamline asset management across traditional and digital holdings where supported.

Reporting and compliance

Donors and recipients have different reporting needs.

• Donor reporting (Form 709): when gifts to a single recipient exceed the annual exclusion in a calendar year, the donor must file Form 709 to report the gifts and allocate use of the lifetime exemption if applicable. Filing Form 709 does not necessarily mean tax is due—only that the gift must be reported.

• Valuation requirements: donors must determine the fair market value (FMV) of the gifted shares on the date of the gift. For publicly traded securities, FMV is typically the average of the high and low market prices on the gift date, or the closing price depending on IRS guidance and broker practices. For privately held shares, valuation can be more complex and may require a qualified appraisal.

• Recipient record‑keeping: recipients should record the donor's adjusted basis, the donor's acquisition date, the gift date FMV, and any documentation (broker statements, gift letter) to support future sale reporting.

• Brokerage reporting: when recipients later sell shares, brokers issue Form 1099‑B showing proceeds and, in many cases, the basis if the broker has basis information. However, for gifted assets, brokers may not always have the donor's original basis recorded, so recipients must be prepared to report the correct basis on their tax returns.

• Penalties and late filing: failing to file Form 709 when required or misreporting large gifts can lead to penalties and interest. Maintain records and consult a tax professional for complex transfers.

State and international variations

• State taxes: some states have estate or inheritance taxes with thresholds and rules that differ from federal law. Most U.S. states do not have a separate gift tax, but rules vary—check state-specific guidance.

• International transfers: cross-border gifts introduce additional complexities: withholding, local gift or transfer taxes, currency issues, and reporting in multiple jurisdictions. Nonresidents and noncitizens may be subject to different rules for U.S. situs assets.

• Professional advice: when transfers involve other countries or assets that are not U.S. stocks, consult a tax attorney or CPA experienced in international tax.

Practical considerations, strategies, and pitfalls

Effective planning around gifts of stock should consider these practical points:

• Check the annual exclusion each year and whether Form 709 will be required; even if no tax is due, filing preserves the correct record of lifetime exemption use.

• Consider the recipient's tax bracket and the kiddie tax when gifting to minors; sometimes gifting cash or using trusts is preferable.

• Beware of gifting depreciated assets: donors lose the opportunity to claim a current capital loss if they gift instead of selling.

• For charitable objectives, donating appreciated shares in-kind to a qualified charity can provide a charitable deduction and avoid capital gains that would arise on a sale.

• Be mindful of means-tested benefits: large gifts may affect eligibility for financial aid, Medicaid, or other programs; timing and structure matter.

• Verify brokerage transfer procedures and potential fees ahead of time; secure the donor's and recipient's account information and required signatures.

• Keep careful records: donor basis, acquisition date, gift-date FMV, transfer confirmations, and any appraisals for privately held shares.

• Coordinate with estate planning: weigh lifetime gifting against the potential step-up in basis at death and consider the donor's remaining lifetime exemption and estate-tax risk.

• When dealing with tokenized securities or crypto-native stocks (where applicable), use secure custody solutions and wallets. Bitget Wallet offers multi-asset custody and user-friendly transfer workflows.

Illustrative examples

Example A: Donor basis < gift FMV and recipient later sells at a higher price.

• Donor bought shares for $10,000 (donor basis). On the gift date the shares were worth $20,000. The recipient later sells the shares for $25,000. The recipient's taxable gain is $25,000 − $10,000 = $15,000 (donor's basis used for gain calculation).

Example B: Donor basis > gift FMV and recipient sells at a loss.

• Donor paid $30,000 originally. On the gift date the shares were worth $20,000. The recipient later sells for $15,000. The deductible loss is calculated as $20,000 (gift-date FMV) − $15,000 = $5,000 (loss measured from gift-date FMV).

Example C: Recipient sells between donor basis and gift-date FMV.

• Donor basis $10,000; gift-date FMV $20,000. If recipient sells for $15,000 (between $10,000 and $20,000), neither a taxable gain nor a deductible loss is recognized.

These short hypotheticals show how the donor's basis and the gift-date FMV are used in different sale outcomes.

Frequently asked questions (FAQ)

Q: Is the recipient taxed when they receive stock as a gift? A: No—recipients generally do not recognize taxable income on receipt of a gift. Tax consequences typically arise when the recipient sells the shares.

Q: Who reports gifts to the IRS? A: The donor reports taxable gifts on Form 709 when gifts to any one recipient exceed the annual exclusion. Recipients generally do not report the receipt of a gift as income.

Q: Can I avoid capital gains tax by gifting stock instead of selling? A: Gifting appreciated stock to a qualified charity can avoid capital gains and may allow a charitable deduction. Gifting appreciated stock to family only transfers the future capital gains tax to the recipient (subject to their basis and holding period); it does not eliminate the tax unless the recipient is tax-exempt.

Q: Is gifting stock better than selling and gifting cash? A: For appreciated publicly traded stock donated to charity, gifting the stock in-kind is often more tax efficient than selling and gifting cash because you can generally deduct the FMV and avoid capital gains. For gifts to individuals, tax efficiency depends on the recipient's tax bracket and other considerations.

Q: When should I file Form 709? A: File Form 709 for any calendar year in which your gifts to an individual exceed the annual exclusion amount. Filing is also required to elect gift-splitting with a spouse when applicable.

References and further reading

• As of 2026-01-17, according to the Internal Revenue Service (IRS) guidance and Form 709 instructions, the rules summarized here are the federal framework for gift and basis treatment. Check IRS resources for the most recent annual exclusion and lifetime exemption amounts.

• For further practical guidance on gifting appreciated stock and charitable contributions, consult current IRS publications and seek advice from a qualified CPA or tax attorney.

• For secure custody and transfers that may interact with digital asset holdings, explore Bitget Wallet's custody offerings and Bitget's trading services.

Final notes and next steps

If you asked "are gifts of stock taxable" to decide whether to transfer shares now or later, remember this simple checklist:

• Confirm current annual exclusion and lifetime exemption amounts for the year in which you plan to gift.
• Determine the donor's basis and acquisition date and provide that information to the recipient and broker.
• If gifting to charity, transfer appreciated publicly traded shares in-kind to maximize tax benefits.
• If gifting to a minor, evaluate kiddie tax and custodial rules.
• File Form 709 when required and keep complete records.

Want to streamline custody and transfers for traditional and digital assets? Explore Bitget Wallet for secure custody solutions and Bitget's services to manage, transfer, and (where permitted) trade assets. For tailored tax guidance and current dollar thresholds, consult a qualified tax professional.

As you plan transfers, keep documentation, label dates clearly, and verify broker procedures in advance to avoid surprises when the recipient later sells shares.

Further exploration: review IRS Form 709 instructions and recent IRS guidance for the tax year you expect to make gifts, and consult a tax professional to align gifting with your overall tax and estate plan.