Tax implications of transferring directly-owned stock to a brokerage account?

Question

I don't know all the proper terminology so I hope this is understandable. My father gave me a chunk of stock. The stock I now own is directly bought and handled through the company who's name is on the stock; i.e. ATT (don't laugh). Its intended purpose was to recycle the dividends back into more shares and thus be a bit of a savings cushion for me when I'm older.

I wish to take the stock and transfer it to a brokerage. I do not wish to cash out my stock but rather put it to better use in another long term safe stock for my future.

Is this possible? Will I get hit with a tax issue? What do I need to know? My stock is losing value over time so regardless of the quantity of shares, the value is just not there. I dislike seeing a potential future savings withering away, thus I want to put my stock into something that I have a tad more control over, and that should be through a brokerage, right?

Thanks to any and all who assist!

Answer 1

If this were a transfer between brokerages, it would be called an in-kind transfer. If you are receiving paper certificates of stock ownership from the company, it will probably be considered a registration of certificates.

Either one of these actions can be expected to have a fee in the $10-$50 range, depending on the broker.

You say that you do not wish to cash out your stock, but "put it to better use" will require selling that stock, and it's much easier (quicker and costs less) to sell where it is and move money to the brokerage account, than move the stock and then sell it. The only difference is that moving the stock in-kind may avoid being "out of the market" for a few days.

Also, you should strongly consider an index ETF for your new position. Index trackers are diversified with holdings in a large number of stocks, which makes them considerably safer than investing in a single company.