can i gift stock without paying capital gains

Lead / Short summary

Can I gift stock without paying capital gains? Short answer: in most cases, yes — a gift of publicly traded stock does not create a capital‑gains event for the donor at the time of transfer. The recipient inherits the donor’s adjusted basis and holding period and will generally owe capital gains tax only when (and if) they sell. This page explains how that rule works in the U.S., special‑case loss rules, gift‑tax and estate considerations, charitable giving benefits, practical transfer steps (including using Bitget and Bitget Wallet where relevant), common planning techniques, and a checklist for compliance.

As of 2026-01-01, according to IRS guidance, lifetime gifts of appreciated property are not treated as sales for federal income‑tax purposes; instead, basis generally carries over to the recipient and gains are realized when the recipient disposes of the property.

1. Background and purpose

People gift stock for many reasons: to shift future tax liability to family members in lower brackets, to make a charitable donation more tax‑efficient, to simplify estate planning, or to teach investing to younger relatives. Understanding whether "can i gift stock without paying capital gains" helps decide whether to transfer shares in kind or sell and give cash.

Note the difference between income‑tax effects (who pays capital gains tax when the stock is sold), gift‑tax rules (whether the donor must file or pay gift tax), and estate‑tax outcomes (step‑up in basis at death vs carryover on lifetime gifts). This article focuses on U.S. federal rules for publicly traded stock and practical steps for transferring shares between brokerages or to custody like Bitget Wallet.

2. U.S. federal income‑tax treatment of a stock gift

2.1 Donor’s treatment

When you ask "can i gift stock without paying capital gains," the key point is the donor generally does not recognize capital gain or loss when making an outright gift of appreciated stock. A gift is not a sale for income‑tax purposes, so donors typically do not report capital gains at the time of the gift.

This rule applies to outright gifts to individuals. Donors should still consider gift‑tax reporting and possible reduction of their lifetime exemption for gifts above the annual exclusion (covered below).

2.2 Recipient’s treatment — basis and holding period

The recipient of a gift generally receives a carryover (transferred) basis equal to the donor’s adjusted basis in the shares. That means the question "can i gift stock without paying capital gains" is answered partly by noting: the donor avoids immediate capital gains tax, but the recipient inherits the donor’s cost basis and holding period and will be responsible for capital gains tax on any later sale.

Example mechanics:

• Donor bought stock at $10/share (donor basis). Market value at gift: $50/share. Recipient sells later at $70/share. Recipient’s taxable gain = $70 - $10 = $60/share.
• The holding period for determining short‑ or long‑term treatment generally carries over from the donor to the recipient.

2.3 Special loss rules and mixed outcomes

If the fair market value (FMV) at the time of the gift is less than the donor’s basis, special rules limit loss recognition. Briefly:

• If the recipient later sells at a price below the FMV at the gift date, the recipient’s loss is generally computed using the FMV at the gift date (not the donor’s higher basis).
• If the recipient later sells at a price between the donor’s basis and the FMV at gift date, neither a deductible loss nor a taxable gain may be recognized.

These rules prevent donors and recipients from combining to create a tax benefit when the donor’s basis is higher than the FMV at the transfer date.

2.4 Short‑ vs long‑term holding periods

Because the holding period usually carries over, if the donor held the shares long enough to qualify for long‑term capital gains treatment before the gift, the recipient keeps that long‑term status for future sales. Conversely, if the donor’s holding period was short, the recipient usually inherits a short period until the combined holding period qualifies as long‑term.

This is an important consideration: when thinking "can i gift stock without paying capital gains," you should also think about whether the recipient will inherit favorable long‑term rates.

3. Gift tax, annual exclusion, and reporting

3.1 Annual gift‑tax exclusion and filing

Gifting stock can trigger gift‑tax reporting even though it does not trigger capital gains tax for the donor. Each year, the IRS allows a per‑recipient annual exclusion (check current year values) — gifts up to that exclusion generally require no Form 709 filing. Gifts above the annual exclusion require the donor to file IRS Form 709 (United States Gift (and Generation‑Skipping Transfer) Tax Return). Filing Form 709 does not necessarily mean you owe gift tax; the excess may simply be applied against the donor’s lifetime exemption.

When you plan a transfer, confirm the current annual exclusion (the amount changes over time) and consider whether multiple transfers or split gifts between spouses affect reporting.

3.2 Lifetime exemption and estate‑tax interaction

Gifts that exceed the annual exclusion reduce the donor’s lifetime gift and estate tax exemption. That exemption is large in recent years but subject to legislative change. Planning lifetime gifts can remove future appreciation from your estate, but those gifts consume part of your lifetime exemption.

When weighing "can i gift stock without paying capital gains," consider whether you prefer to reduce your taxable estate now (by gifting) or preserve lifetime exemption to benefit from a potential step‑up in basis at death (covered below).

3.3 Valuation and date of gift

The date of gift determines FMV for gift tax purposes. For marketable securities, FMV is often the average of trading prices on the date of the gift or the closing price, depending on facts and broker reporting. Accurate valuation matters for gift‑tax filing and for charitable deduction calculations if gifting to a qualified charity.

Keep documentation (broker trade confirmations, statements showing transfer date and price) to support valuation in case of IRS questions.

4. Gifting stock to charities

4.1 Tax treatment for charitable donations of appreciated stock

Donating long‑term appreciated publicly traded stock to a qualified charity is a commonly recommended tax‑smart strategy. If the donor itemizes deductions, they may generally deduct the FMV of donated long‑term appreciated stock, subject to AGI limits, and avoid recognizing capital gains on the appreciation. The charity, as a tax‑exempt organization, can usually sell the donated shares without recognizing tax.

This answers a secondary angle of "can i gift stock without paying capital gains": yes, donating appreciated securities to charity lets donors avoid capital gains tax while obtaining a charitable deduction (subject to limits and substantiation rules).

4.2 Advantages vs selling and donating cash

Benefits of gifting shares instead of selling and donating cash include:

• Avoiding the donor’s capital gains tax liability on sale, leaving more value for the charity.
• Potentially larger charitable deduction (FMV of shares if long‑term appreciated).

However, donors should confirm the charity accepts securities and understand transfer logistics (brokerage transfers vs physical certificates). Many brokerages and custodial platforms, including Bitget Wallet for crypto assets, support in‑kind donations through established procedures.

5. Estate and inheritance considerations

5.1 Step‑up in basis at death vs gifting during life

One of the most important tradeoffs tied to "can i gift stock without paying capital gains" is the difference between lifetime gifting and leaving assets at death. Property inherited from a decedent typically receives a stepped‑up (or stepped‑down) basis to the asset’s FMV at the decedent’s date of death. That step‑up effectively erases unrealized appreciation for heirs and can eliminate capital gains tax that would have otherwise accrued.

By contrast, lifetime gifts carry over the donor’s basis, so a recipient who later sells may owe tax on appreciation that occurred prior to the gift.

5.2 Timing tradeoffs: gift now vs leave at death

When to gift now versus leave assets to heirs depends on:

• Whether the recipient is in a lower capital gains bracket.
• Whether removing future appreciation from your estate is an important goal for estate tax reduction.
• Concern about step‑up in basis at death vs lifetime tax savings for the recipient.

Gifting now can be beneficial when the recipient is in a substantially lower tax bracket and intended to sell sooner; retaining until death may be better when heirs benefit from a step‑up in basis.

6. Practical transfer mechanics

6.1 Broker‑to‑broker transfers and paperwork

To transfer publicly traded shares in kind, donors usually instruct their broker to transfer the shares to the recipient’s brokerage account. Common steps:

1. Confirm the recipient’s account can accept in‑kind transfers and obtain account details (broker name, account title, account number, DTC/ACATS instructions where applicable).
2. Complete a transfer authorization form (often called a “Transfer of Assets” or “ACAT” form).
3. Provide a letter of authorization or gift instruction if required by the delivering broker.
4. Monitor the transfer: in‑kind transfers usually settle through DTC/ACATS and can take several business days.

If you or the recipient use Bitget or a nontraditional custodian, follow that platform’s transfer instructions. For transfers involving crypto or tokenized securities, use Bitget Wallet when supported and verify custody and tax reporting specifics.

6.2 Cost‑basis reporting and brokerage roles

Brokerages are required to report cost basis when securities are sold. When shares are transferred, provide documentation of donor basis to the recipient and their broker. Keep records of:

• Donor’s original purchase confirmations showing basis and dates.
• Gift date and valuation statements from the donor’s and recipient’s brokers.

If basis information is not transmitted automatically, the recipient must use the donor’s records to report gain or loss when selling. Brokers may mark transferred shares as non‑covered for reporting if they lack basis information; that affects Form 1099‑B reporting.

6.3 Gifts to minors and custodial accounts (UGMA/UTMA)

Gifting to minors is commonly done using custodial accounts (UGMA/UTMA). Key points:

• The custodian controls assets for the child’s benefit until the age of majority (which varies by state).
• Taxation: unearned income of a child may be subject to the "kiddie tax," which taxes certain amounts at the parents’ marginal rate.
• Gifts to custodial accounts are irrevocable; choose recipients and timing carefully.

When considering "can i gift stock without paying capital gains" to a minor, remember that the child or custodial account will later sell and recognize gains using carried‑over basis.

7. Tax‑planning strategies and common techniques

7.1 Gifting to lower‑tax‑bracket family members

Transferring shares to family members in lower tax brackets can reduce the family’s overall capital gains tax bill when the recipient sells. However:

• Be mindful of the kiddie tax for children and special rules for spouses.
• Avoid transfers that appear to be tax avoidance schemes; related‑party rules and anti‑abuse provisions can apply.

When asking "can i gift stock without paying capital gains," realize the donor avoids immediate capital gains, but shifting income to a family member can result in tax at their rates when they sell.

7.2 Upstream gifting, trusts and advanced vehicles

More advanced techniques (used with professional advice) include irrevocable trusts, grantor retained annuity trusts (GRATs), and other vehicles that manage control, income, and estate inclusion. These tools can remove future appreciation from the donor’s estate or provide controlled income streams to the donor while passing appreciation outside of estate tax.

These structures are complex and each has different tax rules for basis, trust taxation, and reporting. Consult an estate planning attorney or tax advisor for specifics.

7.3 Donor retains income (e.g., donor‑retained trusts) and partial gifts

Some strategies allow the donor to retain an income stream (or other interests) while transferring remainder interests to beneficiaries. Valuation rules apply when these partial interests are transferred and often require actuarial valuation and careful drafting.

When the question is "can i gift stock without paying capital gains," partial gifts still usually avoid immediate capital gains recognition, but tax consequences on future dispositions depend on the vehicle.

7.4 Selling before gifting vs gifting in‑kind

Deciding whether to sell appreciated shares and gift cash or to gift shares in kind depends on tax and practical outcomes:

• Sell then gift cash: donor recognizes capital gain now and pays tax; recipient receives cash with no built‑in basis from the donor.
• Gift in kind: donor avoids immediate capital gains tax; recipient receives shares with donor’s basis and will owe tax on future appreciation.

If the donor has net capital losses or other tax considerations, selling before gifting may make sense. Always model both approaches.

8. State and international tax considerations

8.1 State income and gift tax variations

State rules vary: some states have gift or inheritance taxes, and some conform to federal rules for income and basis while others do not. Check your state’s rules before making large gifts. For example, a state estate tax or inheritance tax may change the calculus for lifetime gifts vs leaving assets at death.

8.2 Non‑U.S. jurisdictions

If the donor or recipient is not a U.S. taxpayer, different rules apply. Countries differ on gift taxes, capital gains taxation, and basis rules. When a transfer crosses borders, coordinate tax reporting in all relevant jurisdictions and consult international tax counsel.

9. Examples and numerical scenarios

9.1 Simple example: donor basis, FMV, recipient sale at gain

• Donor bought 100 shares at $10 = donor basis $1,000.
• Donor gifts 100 shares when FMV is $50 = market value $5,000.
• Recipient later sells at $70 = proceeds $7,000.
• Recipient’s realized gain = $7,000 - $1,000 (carryover basis) = $6,000. Capital gains tax owed depends on holding period and recipient’s tax rates.

This shows that while the donor answered their "can i gift stock without paying capital gains" question in the affirmative at the time of gift, taxes are deferred and shifted to the recipient.

9.2 Example: gifted stock sold at a loss

• Donor basis $50/share, FMV at gift $30/share.
• Recipient sells at $20/share (below FMV at gift date).
• Recipient’s recognized loss is based on the FMV at gift date (with limits), not the donor’s higher basis. Rules here can restrict tax losses; consult a tax advisor for specifics.

9.3 Charitable donation example

• Donor bought 500 shares at $20/share (basis $10,000).
• FMV at donation $100/share = $50,000.
• Donor donates directly to a qualified charity and itemizes: potential charitable deduction up to FMV ($50,000, subject to AGI limits) and avoids recognizing capital gain on the $40,000 appreciation. The charity can sell without tax.

This demonstrates how "can i gift stock without paying capital gains" is particularly powerful for charitable giving.

10. Common misconceptions and FAQs

Q: Do I pay capital gains when I gift stock? A: Generally no — donors do not recognize capital gains upon making an outright gift, but recipients inherit the donor’s basis and will pay tax on later sales.

Q: Who pays tax when gifted stock is sold? A: The recipient who sells the shares pays capital gains tax based on the carried‑over basis and holding period.

Q: Does gifting avoid estate tax? A: Lifetime gifts reduce your taxable estate but may use part of your lifetime exemption. Gifts above annual exclusions may require Form 709 and reduce your estate tax exemption. Gifts alone do not automatically avoid estate tax without considering lifetime exemption amounts and limits.

Q: What forms do I file? A: Donors file Form 709 for gifts exceeding the annual exclusion. Recipients report gains or losses on their income tax returns when they sell. Brokers report sales on Form 1099‑B with basis reporting where available.

Q: Can I gift stock to avoid my own capital gains tax permanently? A: Gifting defers and shifts the tax burden to the recipient — it does not erase the gain. If the recipient sells, they will face tax on the appreciation unless other rules (like charitable exemption or stepped‑up basis at death) apply.

11. Recordkeeping and compliance checklist

Practical checklist when gifting stock:

• Document donor’s original purchase confirmations (dates and basis).
• Record date and FMV at the gift date (broker statements showing transfer date and market price).
• If gift exceeds the annual exclusion, prepare to file Form 709 and keep valuation support.
• Provide the recipient and their broker with basis documentation.
• For charitable gifts, obtain contemporaneous written acknowledgement from the charity for donations over required thresholds.
• Retain copies of transfer authorizations and correspondence with brokers or custodians (including Bitget support records if applicable).

Keeping clear records simplifies future reporting and defends against audits.

12. Risks, anti‑abuse rules, and IRS concerns

The IRS scrutinizes transfers that appear designed solely to avoid tax; related‑party transactions, step transactions, and other anti‑abuse doctrines can apply. Wash sale rules generally apply to losses on sales of securities and can interact with gifting and repurchase transactions.

When using gifting to shift tax obligations, avoid contrived arrangements and document the bona fide economic motives for transfers.

13. Further reading and references

For authoritative and up‑to‑date guidance, consult:

• IRS guidance on gifts, gift tax, and basis rules (review current publications and instructions to Form 709).
• Major brokerage and wealth management guidance on gifting procedures and tax‑smart gifting strategies.

As of 2026-01-01, according to IRS updates and industry guidance, the fundamental rule remains that gifts of appreciated property are not treated as sales for income‑tax purposes. Check current annual exclusion and lifetime exemption figures when planning.

Notes and caveats

This article focuses on U.S. federal income‑tax and gift‑tax rules for publicly traded stock. Laws, rates, and exclusion amounts change frequently. Always verify current figures and consult a qualified tax, legal, or estate professional for specific advice.

Practical next steps and Bitget options

If you plan to transfer shares or tokenized securities and want a smooth custody and transfer experience, consider using Bitget and Bitget Wallet for supported assets. Bitget provides brokerage and custody services with procedures for in‑kind transfers and documentation support. Speak with your broker or Bitget support to confirm acceptance of in‑kind transfers, basis tracking, and required forms.

If you want help modeling the tax impact of "can i gift stock without paying capital gains," gather these documents before consulting a professional: purchase confirmations (basis), current account statements (FMV), and information about the intended recipient (tax status, age, account type).

Actionable checklist (printable)

• Verify the donor’s basis and holding period.
• Confirm recipient account details and ability to accept in‑kind transfers.
• Obtain broker transfer forms and submit authorization.
• Record gift date and FMV; retain broker confirmations.
• If gift exceeds annual exclusion, prepare Form 709 and valuation support.
• Provide recipient with basis documentation for future tax reporting.
• For charitable gifts, obtain written acknowledgement and verify charity’s EIN.

Want to learn more about transfer services or custody options? Explore Bitget’s platform and Bitget Wallet for streamlined transfers and custody support.

Notes: This article is informational only and not tax or legal advice. For specific guidance about "can i gift stock without paying capital gains" in your situation, consult a qualified tax or estate professional.