How to give shares as a gift this holiday season • Benzinga | Business Top stories

How to give shares as a gift this holiday season • Benzinga

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Stuck on what to give to the person who has everything as a gift? Delay your holiday shopping at the last minute? Why not consider giving stocks as a gift? Contrary to popular belief, it is possible to buy shares on behalf of someone else as a gift. While donating stocks is a great way to help build wealth and generate interest in the market as a whole, there are a few considerations you and the recipient will need to take into account this season. holidays.

Can you give shares as a gift?

Yes! There are several methods you can use to offer an action to a recipient. Offering a share of shares generally involves 2 steps. First, you will need to buy the stocks through an existing brokerage account, or you can open a brokerage account and fund the new account before purchasing the stocks or shares that you want to offer. After purchasing the investment that you want to send to your loved one, you will initiate an electronic transfer to transfer ownership of the stock from yourself to the person to whom you are giving the gift.

Many brokers now also allow you to periodically donate shares to a recipient. This means that it is possible to set up a recurring giveaway on a set schedule that you choose, which can help increase the value of your giveaway over time. For example, you could make an arrangement with your broker to transfer a few shares of a child’s favorite company to their account each year on their birthday.

Regardless of how you decide to donate shares, your broker will ask you to complete a written and signed authorization form providing the broker with explicit details of how and when the shares are to be transferred. Most brokers have a relatively simple form on their websites that you can submit to initiate your transfer. Your broker will likely ask you for the following information when initiating a transfer:

  • Your name and brokerage account number
  • Your address
  • A description of the shares you are transferring, including the number of shares, the name of the company, and the timeframe you want to transfer shares to
  • The name and brokerage account number of the person to whom you are transferring shares
  • The beneficiary’s social security number

You will need to make sure that the recipient already has a brokerage account before transferring shares to them. If you buy stocks for a child who is too young to open their own investment account, you have the option of creating a deposit account, which you will keep control of until the child is of childbearing age. Control. the account themselves.

If you are transferring stocks within a single brokerage (meaning you and the recipient have accounts with the same broker), this process will be very straightforward. However, if you and the beneficiary are investing through different brokerage houses, you will need to complete your transaction by contacting the company the beneficiary is investing through to complete the transaction. You may need to provide additional information about your account and the specific transfer you are making to ensure that the actions you send get to the correct account.

What stocks make great gifts?

One of the benefits of donating stocks is that you can personalize your gift to suit the recipient’s tastes. Let’s take a look at some ideas you can use to start your search for the perfect personalized stock investing.

For kids

Most of the brands kids love are publicly traded companies. Here are some examples of actions that children might find interesting.

  • McDonald’s Corp (NYSE: MCD): One of the world’s best-known fast food companies, McDonald’s is the original creator of Happy Meal, designed specifically to get kids excited.
  • Roblox Corp (NYSE: RBLX): If your child has ever begged you to buy Robux as a gift, you may want to consider investing directly in Roblox itself.
  • Walt Disney Co (NYSE: DIS): From princesses to superheroes, Disney is responsible for creating tons of media enjoyed by kids and adults alike.

For environmentalists

If you are shopping for someone who loves the environment, you may want to consider actions focused on reducing the impact humans have on Earth.

  • Tesla (NASDAQ: TSLA): Tesla is one of the world’s best-known electric vehicle manufacturers, reducing the need for owners to burn fossil fuels.
  • Beyond Meat Inc (NASDAQ: BYND): Beyond Meat is a food manufacturer that focuses on the production of plant-based meat substitutes.
  • First Solar, Inc (NASDAQ: FSLR): As the name suggests, First Solar is a large-scale manufacturer of residential and commercial solar panels.

For technology enthusiasts

Almost all of the popular tech brands are publicly traded companies, so you can donate an investment directly into the business through shares.

  • Alphabet, Inc (NASDAQ: GOOGL): Alphabet is a conglomerate holding company best known for its search engine, Google.
  • Apple Inc (NASDAQ: AAPL): Another well-known tech company, Apple is responsible for some of the most popular portable devices including the iPhone and iPad.
  • Microsoft Corporation (NASDAQ: MSFT): Microsoft is an American technology company that produces everything from desktop computers to accounting software.

Worried that your options will be limited because you can’t afford to donate a full share of Tesla shares? Most brokerage firms now allow you to invest in “fractional stocks,” which are partial stocks of companies that issue high-value stocks. You can even invest a specific amount, allowing the broker to calculate how many stocks your investment can buy. For example, you can place an order to buy Amazon stocks worth $ 50. Your broker will do the math on your behalf and calculate the number of fractional shares you can buy at the current market rate.

Tax considerations for stock gifts

Stocks are considered property by the IRS, which means the recipient of your gift may be subject to taxes. There are 2 main taxes that apply to stock gifts.

  • Taxes on gifts: According to IRS rules, the maximum donation amount an individual can receive without incurring tax penalties is $ 15,000, and the lifetime limit that a person can donate regardless of tax consequences is 11. , $ 7 million. If the shares you offer exceed any of these value thresholds, the recipient will generally be responsible for paying gift taxes.
  • Capital gains tax: If the beneficiary of the shares you are offering sells them at a profit, the sale may be subject to capital gains tax. The specific tax rate that the recipient will have to pay will vary depending on the difference between the original purchase price of the share and the sale price as well as how long the recipient controlled the share prior to the sale.

If you think your donation could put your recipient in a position where they might need to make special tax considerations, it’s always a good idea to speak to a tax professional before purchasing the shares.

Low cost investments for the beneficiary

If you are planning to give shares to someone who does not have a current brokerage account, you may inadvertently trick the recipient into opening an account with the broker you are using to purchase the shares. It is therefore especially important to consider expenses such as account maintenance fees and sales commissions when deciding where to open an account. Taking the time to compare fees and expenses will help save you and the person you’re gifting to money.

Compare online stock brokers

It doesn’t matter if you are opening a brokerage account for yourself to purchase your first stock or if you are creating a custody account for a child, you should take your time and research your brokerage options before creating an account. Consider starting your research with the following online brokerage options.

Spread the holiday cheer with equity investments

Another reason stocks make great gifts? Unlike a toy or a new pair of shoes, inventory can increase in value over time. If you choose a stock that pays dividends, the person you are offering the stock to could benefit from it for life. However, opening and funding a brokerage account is not an instant process. Start comparing brokerage accounts now to make sure you’re ready to give before the holiday season is over.

Frequently Asked Questions

Is a donation of shares taxable?

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Is a donation of shares taxable?

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Sarah horvath

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Yes. If you transfer shares to someone else, the recipient may be subject to gift taxes based on the total value of the shares given to them and the value of any gifts you have given throughout. your life. If the beneficiary sells the shares, he may also be subject to capital gains tax.

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Benzinga

How do I offer stock to my child?

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How do I offer stock to my child?

request

Sarah horvath

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If your child is under 18, you can open a deposit account and invest on their behalf until they are old enough to take control of the account.

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Benzinga

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How to give shares as a gift this holiday season • Benzinga

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