How to sell stock I got as a child?
January 20, 2010 2:47 PM Subscribe
When I was younger, my parents bought me several shares in Disney. I'd like to sell that stock now. What do I have to do to do so, and what taxes, etc. might I incur on it?
If there's any more information I need to post to help figure this out, please let me know, I'm an ultra-noob when it comes to stuff like this.
If there's any more information I need to post to help figure this out, please let me know, I'm an ultra-noob when it comes to stuff like this.
Response by poster: They were held in my mom's name as a custodian, but I just got them turned over to my name.
posted by Mali at 2:51 PM on January 20, 2010
posted by Mali at 2:51 PM on January 20, 2010
from the TurboTax:
The basis of securities you receive as a gift depends on whether your ultimate sale of the stock produces a profit or loss. If you sell for a profit, your basis is the same as the basis of the previous owner.
In other words, the basis is transferred along with the property. If you sell for a loss, though, the basis is either the previous owner's basis or the value of the stock at the time of the gift, whichever is lower. In other words, you don't get to write off a loss that occurred while the donor owned the securities.
Tip: If you get stock or other assets as a gift, ask your benefactor for information about his or her basis—and keep that information with your records.
posted by abdulf at 3:01 PM on January 20, 2010
The basis of securities you receive as a gift depends on whether your ultimate sale of the stock produces a profit or loss. If you sell for a profit, your basis is the same as the basis of the previous owner.
In other words, the basis is transferred along with the property. If you sell for a loss, though, the basis is either the previous owner's basis or the value of the stock at the time of the gift, whichever is lower. In other words, you don't get to write off a loss that occurred while the donor owned the securities.
Tip: If you get stock or other assets as a gift, ask your benefactor for information about his or her basis—and keep that information with your records.
posted by abdulf at 3:01 PM on January 20, 2010
What's most important for tax purposes is finding out when the stock was originally purchased and for how much. You will have to pay capital gains taxes on the increase in value.
If they have always been held by the broker, this should be pretty easy. If your mother has been holding the certificates, then you'll be in luck if she held on to all the transaction documents. If not, you'll have to contact Disney's transfer agent and fill out various notarized forms. It's a pain, and transfer agent call center people in my experience are kind of hit and miss in their competence, but you should be able to work it out.
posted by gabrielsamoza at 3:06 PM on January 20, 2010
If they have always been held by the broker, this should be pretty easy. If your mother has been holding the certificates, then you'll be in luck if she held on to all the transaction documents. If not, you'll have to contact Disney's transfer agent and fill out various notarized forms. It's a pain, and transfer agent call center people in my experience are kind of hit and miss in their competence, but you should be able to work it out.
posted by gabrielsamoza at 3:06 PM on January 20, 2010
you sure its worth it? the current stock price is only $31 a share. so even 3 shares is only 90 dollars.
posted by majortom1981 at 3:32 PM on January 20, 2010
posted by majortom1981 at 3:32 PM on January 20, 2010
I'd keep at least one, just for the cool stock certificate.
posted by madajb at 3:40 PM on January 20, 2010
posted by madajb at 3:40 PM on January 20, 2010
You'll likely have to pay long term capital gains taxes on any gains accrued between the time of purchase and the time of sale.
The tax will be between 5-15%. Shouldn't be too complicated - any turbotax/h&r, etc... will take care of it. Like majortom1981 said, it's only $91 so I wouldn't worry about paying any estimated taxes on it until tax day 2011.
posted by jourman2 at 3:47 PM on January 20, 2010
The tax will be between 5-15%. Shouldn't be too complicated - any turbotax/h&r, etc... will take care of it. Like majortom1981 said, it's only $91 so I wouldn't worry about paying any estimated taxes on it until tax day 2011.
posted by jourman2 at 3:47 PM on January 20, 2010
Google says the price around your birthday (1987) was about $5. That is a gain of 672%!
So (not knowing your tax bracket) you'd pay 15% tax on $26 (figuring current price $31 - basis of $5), or $4 a share. This means you personally would net $27 a share.
I am no mathlete, so someone else may need to correct me here.
posted by charlesv at 3:47 PM on January 20, 2010
So (not knowing your tax bracket) you'd pay 15% tax on $26 (figuring current price $31 - basis of $5), or $4 a share. This means you personally would net $27 a share.
I am no mathlete, so someone else may need to correct me here.
posted by charlesv at 3:47 PM on January 20, 2010
Unfortunately, there is a lot of misinformation here. Because DIS has historically had frequent dividends, you need to do this in the right way. But this is a good problem to have, and it's a good and simple way to learn a little bit about stocks and the taxes associated with them.
First, like others have said, figure out how the stock was held and where.
Second, you need to figure out what has gone on with the dividends, especially whether they have been paid to cash (in which case they will have been subject to taxes) or whether they have been reinvested (which would be preferable, and may be more likely). If they've been paid to cash, there is also a big chunk of cash sitting in an account somewhere. If they have been reinvested, you just have more share of Disney.
This is not really that complicated as long as they have been in the same place. If they were really held in your mother's name, as opposed to street name, or if they are actually certificated, you're going to have to consider the splits that have taken place when accounting for all of this. Charlesv's ~$5 price is split adjusted and takes into account the 1992 4:1 split and the 1998 3:1 split. So, one share was really $60 in 1987, it's just that that one share is now 12 shares (worth around) $31 each, and in the intervening 23 years that one share has paid out several dozen dividends.
Good luck, have fun figuring this out!
posted by iknowizbirfmark at 4:36 PM on January 20, 2010
First, like others have said, figure out how the stock was held and where.
Second, you need to figure out what has gone on with the dividends, especially whether they have been paid to cash (in which case they will have been subject to taxes) or whether they have been reinvested (which would be preferable, and may be more likely). If they've been paid to cash, there is also a big chunk of cash sitting in an account somewhere. If they have been reinvested, you just have more share of Disney.
This is not really that complicated as long as they have been in the same place. If they were really held in your mother's name, as opposed to street name, or if they are actually certificated, you're going to have to consider the splits that have taken place when accounting for all of this. Charlesv's ~$5 price is split adjusted and takes into account the 1992 4:1 split and the 1998 3:1 split. So, one share was really $60 in 1987, it's just that that one share is now 12 shares (worth around) $31 each, and in the intervening 23 years that one share has paid out several dozen dividends.
Good luck, have fun figuring this out!
posted by iknowizbirfmark at 4:36 PM on January 20, 2010
On second thought, I think that I am screwing up the tax treatment of reinvested dividends, so once you figure out what went on with the dividends, look more closely at that issue. Sorry - it's late for me.
posted by iknowizbirfmark at 4:44 PM on January 20, 2010
posted by iknowizbirfmark at 4:44 PM on January 20, 2010
Ignoring, for now, the tax implications, the closing market price of Disney on Friday, January 2, 1987 was $44.832 per share (they had fractions back then, so I think that price actually might be $44 and 7/8). Today, that has split to 12 shares worth a total of $374.28 at today's closing price ($31.19 per share) and has paid out (15 minutes in Google Finance and Excel tells me) $39.66 in dividends. Obviously, there are easier ways to find this information that doing it by hand. Reinvesting dividends probably would hurt you overall, as it's down a cumulative 7% over the last ten years.
posted by iknowizbirfmark at 5:16 PM on January 20, 2010
posted by iknowizbirfmark at 5:16 PM on January 20, 2010
My answer assumed dividends were not reinvested and that your mother has been taking those and spending them on crack and hookers.
posted by charlesv at 5:20 PM on January 20, 2010 [1 favorite]
posted by charlesv at 5:20 PM on January 20, 2010 [1 favorite]
Presumably your mother held them through a brokerage or other investment advisory company. This is how the vast majority of retail investors own stock. Simple answer = get in touch with this company. They do this sort of thing every hour and can help you much better than AskMe.
posted by jckll at 7:58 AM on January 21, 2010
posted by jckll at 7:58 AM on January 21, 2010
This thread is closed to new comments.
if it's the lattercall your broker up and sell them. Taxes are based on the difference between selling cost and purchase price, generally speaking.
posted by dfriedman at 2:50 PM on January 20, 2010