transferring US stock to UK husband

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transferring US stock to UK husband


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Old 1st November 2018, 09:45 AM
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Maddeningly frustrating to uncover simple information sometimes!

I have some American stock (Merck) gifted to me in the 1990s by my parents. The cost basis is very low so virtually the entire value is considered to be a capital gain. I would now like to divest myself of the stock and invest the capital elsewhere, preferably outside of the USA.

The options seem to be either to sell it or transfer it to my husband. Selling it would involve 3 transactions over 3 years to accomodate the UK capital gains allowance so my preferred option is to transfer the stock to my husband.

Looks like the best way to do this is for my husband to open an account in a brokerage firm here in the UK and for me to transfer the stock into that account. No matter which way i do it, we will still need to obtain a Medallion Stamp (which i only heard of yesterday) which the broker can provide- for £295!!

So here is my specific question- sorry for the prelude....
The value of the stock being transferred exceeds the US gifting limit of $14000, but is still within the allowance for transfer between spouses. I am hoping that transferring the stock to a nominee account at a british brokerage will not trigger US gift tax, but what do you think?

Any obvious pitfalls i have missed??

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Old 1st November 2018, 10:21 AM
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Generally speaking, a transfer like this might trigger the need to fill out a gift tax form for the US, but shouldn't involve actually paying any gift tax.

I had a similar situation when my father gifted me cash at one point. (Long story) Yes, I had to file a gift tax filing for him, but there was no payment of taxes involved. But according to the FAQ on the IRS website, gifts to a spouse are generally not subject to gift tax. https://www.irs.gov/businesses/small...-on-gift-taxes

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Old 1st November 2018, 12:05 PM
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Quote:
Originally Posted by sueinwales View Post
I would now like to divest myself of the stock and invest the capital elsewhere, preferably outside of the USA.
Make sure that if you are investing in your own name, you use only US domiciled funds or ETFs, or individual stocks. Using the usual UCITS funds and ETFs marketed in the UK will lead to appalling US tax problems (Google 'PFIC' for more).

Quote:
Originally Posted by sueinwales View Post
The options seem to be either to sell it or transfer it to my husband. Selling it would involve 3 transactions over 3 years to accomodate the UK capital gains allowance so my preferred option is to transfer the stock to my husband.
Presumably, selling this yourself would also create a US capital gains tax liability that it is far better to avoid? It seems sensible to transfer these stocks to your husband and then let him drain the proceeds using his annual UK capital gains tax-free allowance, something unavailable to you as a US citizen.

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Originally Posted by sueinwales View Post
The value of the stock being transferred exceeds the US gifting limit of $14000, but is still within the allowance for transfer between spouses. I am hoping that transferring the stock to a nominee account at a british brokerage will not trigger US gift tax, ...
Have you found this article: https://thunfinancial.com/home/ameri...ident-spouses/

Excerpts:
Quote:
Understanding the Cross-Border Tax Implications
...
While U.S. citizen couples can gift an unlimited amount between spouses without any estate or income tax consequences, an American with a non-citizen spouse is limited to a special annual gift tax exclusion of $149,000 (2017) for gifts to a non-citizen spouse; gifts in excess of this amount will require the U.S. spouse to report the gift on their federal gift tax return (Form 709) and the “excess” gifting beyond the annual exclusion will reduce the donor-spouse’s remaining lifetime unified credit from transfer taxes (i.e., gift, estate and generation-skipping transfer taxes (GST)). Despite these limitations, interspousal gifting may provide substantial opportunities to lower U.S. income and transfer tax exposure for the mixed nationality couple.
...
Gifting Appreciated Stock to a Non-Resident Alien Spouse
This has been considered a controversial strategy, but, if managed and reported properly, has strong legal support (see sidebar). If the couple are residents of a low-tax or no-tax jurisdiction (so little to no taxes will be owed in the country where they reside), and if the non-U.S. spouse is not a tax resident of the United States (i.e., not a citizen, green card holder or a “resident alien” as elected for U.S. tax filing purposes), the U.S. spouse may opt to transfer shares of this stock in kind to the non-U.S. spouse. So long as the gifting (based up-on current market value of the asset) falls below the $149,000 (2017) threshold, the transaction has no federal gift tax consequences (see sidebar). Now the non-resident alien spouse owns considerable shares in the highly appreciated stock, and can sell these shares. As a non-resident alien, there will be no capital gains taxes owed in the United States.

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Old 10th July 2019, 10:05 AM
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Too much was happening last year for me to follow up on the sale of my stock (worth around $35K so well within spouse gifting limits), but I am determined to get rid of this headache this year for sure!

Have just discovered that I actually have Stock Certificates (I had thought everything was now electronic) and from various things i have read it looks like i will have to physically send these into Wells Fargo Stockholder Services (?) What's the best way to do this?

And i still have to figure out the medallion stamp, which is a real pain.

Also, the address listed on the Certificates is my previous address. We retired and moved house (husband is a vicar, so we had to return the house when he finished!) in 2015. Will this complicate things??

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Old 12th July 2019, 06:44 PM
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sueinwales -- I would recommend contacting Merck & Co. investors relations directly ([email protected]) and then utilize Merck's Transfer Agent:

Merck Shareowner Services
EQ Shareowner Services
1110 Centre Pointe Curve
Suite 101
Mendota Heights, MN, USA 55120-4100

to liquidate your shares. Either should provide the requirements to settle your account for you. Stock certificates can be endorsed, much like a check, to transfer. All Merck shares ultimately go through their transfer agent and they also operate a "Dividend Reinvestment Plan." Of course, you could always go through Wells Fargo -- but expect a hefty commission (they are, of course, only a middle-man.) In any event, please get instructions from Merck or Wells Fargo on their specific procedures and send any endorsed certificates by certified mail or courier. Your address shouldn't be an issue, but you may have to change your address with Merck first. Cheers, 255

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