[tableclocks]

If I give my 5 kids, $10,000 each in a mutual fund for xmass before the end of this year, 2014, is there any federal or Maryland tax consequences on the principal, to them or me, other them what it may earn by the end of the year?
If they cash it in, in 2015 , any tax consequences on the principal?
Thank you... richard

[ma0641]

May depend on where the $10K comes from. Are you selling shares in a fund to get the $50K or do you have it in a money market account, checking etc? The gifting is not a problem for them, how it is possibly derived may be for you.

[joypulv]

You can give cash and not have any tax consequences. I think the gift limit is still 13K per person. I wouldn't give a mutual fund if they will probably want to spend it.

[ebaines]

You may make a gift of up to $14,000 per child per year without any immediate tax consequence. If you make the gift by purchasing mutual funds in their names using cash then their tax cost basis is set by the value of the funds as of the date of the gift. But if you are going to be transferring fund shares you currently own to them without first selling the shares, their tax basis will equal your current tax basis. When they sell, if the value they receive is greater than the tax basis they will have capital gains tax to pay. There may also be taxes on any income they receive from the fund during the time they own it.