Pere gifted shares in a public corporation with a fair market value of $50,000 to his 12 year old son, Fils. After Fils received $1,000 in dividends, he sold the shares for $53,000. What are the tax effects of the dividend and the sale?

Question

Quizplus · Accepted Answer

Since Pere gifted the shares to his son, Fils is now the owner of the shares and will be responsible for reporting any income and gains on his tax return. Fils will claim the dividends as income and the capital gain on the sale of the shares as a capital gain on his tax return. Pere will claim nothing on his tax return since he is no longer the owner of the shares.

Pere Gifted Shares in a Public Corporation with a Fair