Shares

[peggyfromwastate]

My Grandpa worked for GE- they gave him lots of shares as part of his benefits package. Now he is giving them away. He gave us 10 shares for graduation from med school, and 10 for Christmas. He actually just told me he was doing this, and on the Christmas card they wrote it down.

Does anyone know how this works? Do we need some type of a form or a contract, and what do we do with shares? We don't have any investments currently- so it's not like we could just "roll it" into an investment portfolio. I don't even know what to do-- but I would like to actually have the shares under our name, rather than just this verbal agreement type of thing. :huh: :huh:

Can you point me in the right direction here?

:huh: :anyolne:

[DCJenn]

Re: Shares

You should receive actual stock certificates. We did when we got ours from my grandfather who worked for Westinghouse for eons.

Jenn

[peggyfromwastate]

Re: Shares

So you just store them? Are these sort of like bonds?

[DCJenn]

Re: Shares

I keep them in our fireproof safe. If you decide to sell them, you'll need them. Some places have gone to paperless shares but you'll get all of the paperwork to indicate how many you have, etc.

Jenn

Re: Shares

Along the lines of what Jenn said, you want the paperwork. Also, when they officially become "yours" you want to keep track of all the statements, earnings, losses, dividends, etc. for taxes.

Paperwork becomes essential to figuring out capital gains or losses when you sell in any given tax year. And even when you don't sell, earnings are still part of your tax situation. Especially if you hold them and reinvest dividends for a long time it can get tricky to determine the cost basis of your shares. Meaning, let's say each share is worth $10 now, but ten years from now each share is worth $20. Your capital gains would be $10.

That sounds simple but then it's first in / first out. So, lets say you always reinvested your dividends to own more than grandpa originally gave you and those shares bought that way would cost more than $10. So, if as part of your sale, you sold some of the shares that cost more, you'd be exagerrating your capital gains if you claimed that all the shares you sold had a cost basis or starting point of $10 and that would unnecessarily increase your tax liability.

However, the shares you sell first have to begin with those first in i.e. the cost basis of the original shares you began with due to the gift. If that weren't the case the opposite of the first example would be true ... you'd be decreasing your tax liability by minimizing on paper your true gains.
And so it goes for losses too.

But more critical in the short term is simply getting the shares in your name. Like Jenn said, if all gramps is doing is saying they're yours, then they're really not yours yet.

ETA: I think the shares you get from grandpa have to be calculated in terms of their own cost basis at the time he purchased them. So, looking at what I wrote above, it's not even as simple as you starting at the worth of what the gifted share is at the time of the gift e.g. $10, but what granpa originally bought the share at years ago. Clear as mud, right?

[peggyfromwastate]

Re: Shares

uh, thanks Kevin and Jenn... It all makes sense now.



Seriously!!! We're going to visit in March, and we shall tackle the paperwork then! Thanks!

Re: Shares

And your grandfather probably will guide you step by step.

[peggyfromwastate]

Re: Shares



I don't think so. Last year, in a panic, right before tax time, they needed *me* to help them navigate TurboTax! They just wanted to be sure to overpay, and they sure did!

Later they went to an accountant to get it straightened out. They had significantly overpaid the IRS for... I think about 5 years or so. (Grandpa is 88!)

And, since they are faithful libs, I congratulated them on their contribution to the AMT last year.



I said: "you can't complain, you keep electing these people."

Yes, I'm a very sweet granddaughter! But no one else would touch their taxes, so...

Re: Shares

And, since they are faithful libs, I congratulated them on their contribution to the AMT last year.



I said: "you can't complain, you keep electing these people."

So, funny isn't it. If they complain, it really could've been different. If they choose the route of "it's great for the country, they can take my money, blah, blah", ask them what would keep them from donating that amount to charity if they got it back? Oh, they'll probably say they would be OK with that but they're sure other Americans wouldn't do the same. :P