“You can gift appreciated stock to younger relative that’s not subject to the kiddie tax and have a very small or even no tax to pay,” said Robert Seltzer, a CPA with Seltzer Business Management in Los Angeles. “Discussion with the client should be about whether this is an asset that they want to keep for themselves or if they intend to pass it on via their estate or to gift it.”
Another option: Gift the highly appreciated item to children. “Then when and if the item is sold, the kids pay the tax,” Eisenberg said. “Issue here is, if there’s a large gain, the kids’ tax bracket on long-term gains would be the same as the person making the gift.”
Other tax-smart strategies include donor-advised funds and charitable remainder trusts; grantor retained annuity trusts if the client is expecting growth greater than the applicable federal rate; or even an “intentionally defective grantor trust,” Levi said. “This [last] strategy has risks, and shouldn’t be engaged in without significant counsel.”