'Gifting' UK shares (AIM) to my Son in Florida - how to do ?

[TorquayFan]

I am a Brit, living in Thailand, wanting to 'gift' GBP6K (p.a.) of UK shares to my Son, a UK/US National, now living in Florida.

 

Please, does anyone have any idea how this can be done without involving my Son, unless necessarily so, in US tax liabilities ?

 

The easiest way we first thought of is that he should hold a UK Share Dealing a/c and put the shares in an ISA. But are there any US tax implications of doing that ?

 

It's a bit technical but does anyone have any ideas please OR have suggestions for sources for advice at reasonable cost.

 

Thanks.

Edited November 26, 2022 by TorquayFan

[taxout]

If you give him the shares as a gift, then when he sells them he'll be taxed in the US on any gain calculated on the basis of what you originally paid for them. But if he inherits the shares when you die he'll only be taxed on any gain accruing after your death.

 

A foreign tax-sheltered account like an ISA usually creates nothing but headaches for an American because the US tax rules aren't written to deal with them.

 

If the value of the gifts he receives from you a non-US person is more than $100,000 in any year he'll have to file IRS Form 3520.

[TorquayFan]

Thank you taxout - may I reply to that later. VERY interesting and I appreciate your reply. ATB

[TorquayFan]

Hello Taxout - sorry for the late reply - I have been travelling . . .

 

Re. your para 1 - OK then giving him the shares is not on at all. Original and current SP is say 20 pence but in the next 12 months I expect then to be say GBP4.

 

The 'inherit' route sounds good - is there a value limit on how much value in shares I can give him ? Then to be taxed on a subsequent increase later will not be a problem for him.

 

Re. your para 2 - OK I'll rule out the foreign 'tax sheltered account for him.

 

Re. your para 3 - yes any gift won't be in excess of $100,000 but the inheritance is likely to be that or more.

 

To explain - in the UK I can give my 2 other Sons up to GBP6,000 p.a. and they they hold the shares in an ISA OK. I want to do the same for the youngest in Florida.

 

Many thanks for the pointers - all thoughts appreciated.

 

 

 

[taxout]

Since you're not a US person for US purposes, there's no Federal tax payable regardless of the amount you give or bequeath your son.

 

But if he's required to file Form 3520 and doesn't, then there is a penalty based on the value received. Note the Form applies to bequests as well gifts.

 

The elimination of accrued capital gains on bequests -- the "stepped-up basis rule" -- is one of the great loopholes in the Federal tax code, and one day it will be closed.

[TorquayFan]

Hello Taxout - I really can't thank you enough for this discussion which has really helped clear my mind. We have concluded that 'gifting and bequest' is the route to take - hoping the regs don't change in the next 12 months or so.

 

I've been able to transfer shares to 2 Sons in the UK and now cater in my Will to equalise for the Son in the USA in my will atm and to be gifted cash when the SP goes up.

 

(This may all seem bizarre but have a look at Scancell on UK AIM market) ATB