Author Topic: Capital Gains on UGMA/UTMA Account  (Read 3482 times)

Kman0010

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Capital Gains on UGMA/UTMA Account
« on: April 16, 2014, 07:19:27 PM »
Hey all!

I'm a long time lurker and a great fan of all the information on the site & forum. Please excuse this post if this has been answered before, but I could not find something similar during my previous searches.

I'm a 26 year old male who is finally focused on becoming financially independent. I was fortunate enough to have several UGMA accounts recently transferred to me from my Father at the beginning of 2014. Prior to this transfer I did not have any knowledge of these accounts. After a steep learning curve, I managed to finally get all the accounts in my name. I have a mix of funds from several different firms with varying amounts:

TCGXY @ $2300
RSEGX @ $3800
WOGSX @ $3000
JNTFX @ $8600
JNRFX @ $9200

The original UGMA accounts range in age from 3-8 years old. At the moment, I am planning on selling all of my shares due to the high fees associated with each account and putting the money towards VTSAX. I plan on using this as the taxable investment portion of my retirement fund in addition to my annually funded ROTH. My question is now that the accounts are transferred in my name, does that qualify each account as a "new account" where I would be subject to short term capital gains tax if I were to sell this year? Or does the history transfer with the removal of my custodian? I believe my Father (custodian) has been paying the required taxes on it every year.

I make 40K (15% tax bracket) and my understanding is that my long term capital gains rate is 0%. I would like to sell these before I advance in my career and reach the next bracket.

Any help would be greatly appreciated! This is still a learning process for me so I apologize in advance if I am missing something.

beltim

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Re: Capital Gains on UGMA/UTMA Account
« Reply #1 on: April 16, 2014, 07:32:45 PM »
My question is now that the accounts are transferred in my name, does that qualify each account as a "new account" where I would be subject to short term capital gains tax if I were to sell this year? Or does the history transfer with the removal of my custodian? I believe my Father (custodian) has been paying the required taxes on it every year.


You've got it right - the cost basis does not change because of the name change.  So anything that was long term gains will continue to be.

Kman0010

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Re: Capital Gains on UGMA/UTMA Account
« Reply #2 on: April 17, 2014, 07:23:40 AM »
Great! Thank you the clarification. Off to transfer all of my accounts!