Is the gift I received considered taxable income on my tax return?
Usually not. For example, if your grandfather gives you $5,000 in cash for Christmas, you do not report that on your tax return and it is not taxable income.
If you received a gift of property such as a home or stocks, you usually have the same cost basis as whoever gave you the gift and would only recognize any income when you sell the property.
For example, let's say your grandfather gives you stock that is worth $10,000, which he purchased ten years ago for $2,000. If you immediately sell the stock, you will report a long-term capital gain of $8,000 on Schedule D of your tax return.
The rules for calculating cost basis for stocks or other property are complex, so consult a tax guide or the IRS website to help you determine what cost basis to use for property received as a gift.
You can find more information in IRS Publication 551 .
If you received a gift of property such as a home or stocks, you usually have the same cost basis as whoever gave you the gift and would only recognize any income when you sell the property.
For example, let's say your grandfather gives you stock that is worth $10,000, which he purchased ten years ago for $2,000. If you immediately sell the stock, you will report a long-term capital gain of $8,000 on Schedule D of your tax return.
The rules for calculating cost basis for stocks or other property are complex, so consult a tax guide or the IRS website to help you determine what cost basis to use for property received as a gift.
You can find more information in IRS Publication 551 .
