A person might want to transfer shares of stock for various reasons. Shares of stock can be transferred as a donation, to pay a debt, or to satisfy an inheritance. Whatever the reason, the basic process is the same. If the transfer is done strategically, there can be significant tax benefits by paying with stock instead of using cash.
You can use stock to pay for things.
You can pay for things with stock to avoid capital gains taxes. For instance, you can donate stock to approved charities and avoid the capital gain. Also, you can leave shares of stock to your heirs. There may still be some taxes incurred, so work with a qualified tax professional. A tax professional can guide you through the intricacies of the tax code and help you make the best decisions for your personal situation.
You can also purchase large items with stock. For instance, a business purchase can be a great opportunity to pay with stock shares.
The process of transferring shares is similar regardless of the reason.
The process of transferring stock shares.
To transfer shares from your account to the account of another entity, you will need the account information for the receiving account. Then approach the bank or brokerage that currently holds the shares and ask for a Transfer of Assets (TOA) form. This form will authorize the brokerage to release the shares from your account and transfer them to the receiving account. All account owners will need to sign the form and a signature guarantee will likely be required. A signature guarantee is a document that must be signed in front of an authorized transfer agent, who inspects the identification of the owners and guarantees the validity of the signatures.
Know your tax situation.
Share transfers usually have significant tax benefits. To realize the full benefits of your transfer, work with a qualified tax professional. Your accountant or lawyer can help you stay within the IRS guidelines for this type of transaction.
You can use stock to pay for things.
You can pay for things with stock to avoid capital gains taxes. For instance, you can donate stock to approved charities and avoid the capital gain. Also, you can leave shares of stock to your heirs. There may still be some taxes incurred, so work with a qualified tax professional. A tax professional can guide you through the intricacies of the tax code and help you make the best decisions for your personal situation.
You can also purchase large items with stock. For instance, a business purchase can be a great opportunity to pay with stock shares.
The process of transferring shares is similar regardless of the reason.
The process of transferring stock shares.
To transfer shares from your account to the account of another entity, you will need the account information for the receiving account. Then approach the bank or brokerage that currently holds the shares and ask for a Transfer of Assets (TOA) form. This form will authorize the brokerage to release the shares from your account and transfer them to the receiving account. All account owners will need to sign the form and a signature guarantee will likely be required. A signature guarantee is a document that must be signed in front of an authorized transfer agent, who inspects the identification of the owners and guarantees the validity of the signatures.
Know your tax situation.
Share transfers usually have significant tax benefits. To realize the full benefits of your transfer, work with a qualified tax professional. Your accountant or lawyer can help you stay within the IRS guidelines for this type of transaction.
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Want to understand the difference between a notary public and signature guarantee? Check out the signature guarantee blog for more information.
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