This is very likely tax fraud, as others have noted. Look up the “step doctrine” for more details.Say she has $450 in earned income from my company.Watch out for the Kiddie Tax
https://www.irs.gov/taxtopics/tc553
They may owe more taxes than you expect when they sell.
Then I open a trading account in her name and transfer stocks with $17K gain to her. She then sells it the next day. So she has $17k+$450 in her account
I'm guessing in this case there is no tax for her to pay (there is no kiddie tax here)
You are right she doesn't have to sell the stock but then by selling the stock she can use the money tax free to buy things for the house that we all live in.
Am I thinking through this right or is this just a useless exercise.
It could also be considered criminal theft in the eyes of a prosecutor. Once you give your daughter stock, it belongs to her. If you go into her account and transfer the proceeds of the sale back into your account, that is stealing. I don’t know how old she is but she likely didn’t/couldn’t consent to giving you a financial gift. It would be analogous to you raiding her piggy bank and using the money to pay the lease on your car. You are required by law to provide basic support for your children, including food, clothing, shelter, and transportation, so using it to buy food she eats isn’t a loophole.
Bogleheads is full of people who have become multi-millionaires without needing to resort to shady or illegal tax strategies. I’d strongly suggest investing your time and energy into other areas, such as earning more income. It will likely pay off more, is more ethical, and will help you sleep better at night.
Statistics: Posted by fyre4ce — Sun Dec 03, 2023 9:25 pm — Replies 19 — Views 1184