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November 07, 2007


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I'm quite annoyed about this since this was one of my vehicles for funding college. I currently have my first daughter in college this year, so our contribution towards her college bills for this year are coming from the transference of stock. Fortunately the stock has appreciated quite a bit since the transfer so we get some additional benefit. I'll be running a couple of different scenarios for next tax year with my CFP. I wonder if I were not to claim her as a dependent next year and still give her the stock if she then pays cap gains at her independent "unmarried single" rate.

I was hoping to kill two birds with one stone by going this route - finance college and rebalance my portfolio by giving away my pure stocks that have done well.

I seem to remember the last time congress raised the age from 14 to 18 (I think it was before last year) they made it retroactive to that current tax year which messed up a lot of people who had already transferred and sold the investments. Fortunately, this time they passed the law effective in the next tax year so I at least get to execute my strategy cleanly for one year.

Phil - your daughter should pay at her rates assuming she is over 18 and not a dependent. Of course, next year you are in trouble, unless she provides half her support with earned income (wages).

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