Submitted By: Dan
Answered: March 25, 2016 12:14 pm

I gave shares of stock to my niece several years ago when the shares were worth more than I had paid. Now I’ve learned that the shares have become worthless. What’s her loss?

To determine her loss, she needs to know her tax basis. When you give property, such as stock, the recipient’s tax basis used for determining gain or loss is usually your basis. More specifically, since the value of the property equaled or exceeded your basis at the time you gave it to your niece, her basis for determining loss is your basis (plus all or part of gift tax paid on the gift). If the stock had been worth less than your basis when you gave it to your niece, her basis for determining loss would be the date-of-gift value.

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Tax Glossary

Percentage depletion

A deduction method that applies a fixed percentage to the gross income generated by mineral property.

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