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Say I have 100 of apple (AAPL) shares and it's worth above 100 US Dollars now. I want to literally give them to my friend at a very cheap price because he helped me in some other stuff. So I want to sell my 100 shares of AAPL to him at a price of 10 or even 1 US Dollar. Is that legal/allowed?

If not, is there any legal documentations that I can refer to?

If it's doable, I hopefully to get some detailed information about this. I'd like to know about:

  • if the two persons are not served by a same broker.
  • if the two persons are both US citizen
  • if the two persons are neither US citizen
  • if the person who sell are US citizen and the person who buy are not, and and vice-versa

Thanks very much!

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  • There may be tax consequences for the receiver, i.e., the difference between market price and paid price might be treated as taxable income. – Peteris Nov 9 '14 at 4:23
  • @Peteris what if the receiver is not us citizen? and if this is able to do, should the broker (or two brokers) take care of all this? – AGamePlayer Nov 9 '14 at 4:37
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    It will depend on the tax rules relevant for the receiver, if they're in Elbonia then Elbonian laws apply. Brokers will definitely not take care of all this, your taxes aren't their business. – Peteris Nov 9 '14 at 4:41
  • Generally, for tax/legal issues jurisdiction is required. Since you've mentioned US in the question - I'll tag it as US. – littleadv Nov 9 '14 at 5:54
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    Make sure there isn't an employer to employee relationship or the IRS could consider it not a gift, but as salary. – mhoran_psprep Nov 9 '14 at 11:08
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So I want to sell my 100 shares of AAPL to him at a price of 10 or even 1 US Dollar. Is that legal/allowed?

Of course. It's your stocks - do with it what you want.

if the two persons are not served by a same broker.

You'll have to talk to your broker about the technicalities of the transaction.

if the person who sell are US citizen and the person who buy are not, and and vice-versa

Since you asked specifically about US citizenship, I'll assume you're in the US or the transaction is taking place in the US.

Citizenship has nothing to do with it (except may be for economic sanctions against Russians or Iranians that may come into play).

What is important is the tax residency status. Such a transfer is essentially a gift, and if you're a US tax resident (which doesn't correlate to your immigration status necessarily) - you'll have to deal with the gift tax consequences on the discount value.

For example - you have 100 shares of AAPL which you sold to your friend for $1 each when the fair market value (FMV) was $501. So essentially, the friend got $50,100 value for $100. I.e.: $50K gift. Since this amount is above the annual $14K exemption - you'll have to deal with the gift tax and file gift tax return.

There are also consequences for the capital gains tax for both you and your friend.

I suggest you talk to a licensed tax adviser (EA/CPA licensed in your State) about the specifics given your circumstances.

If you (or the recipient) are also a foreign citizen/tax resident - then that country's laws also may affect your situation.

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    Apple shares are currently ~109, so 100 shares would be within the exemption level for gift tax purposes. Assuming he's not gifting tons of other things this year he is in the clear. However, Apple stock is overall rising this year and Christmas is coming. So if he waits too long the amount might go over the exemption of 14k. – Carlos Bribiescas Nov 9 '14 at 5:59
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    @CarlosBribiescas the numbers are just an example, I don't know how much apple shares are and don't care. – littleadv Nov 9 '14 at 6:04
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    Was just pointing out that practically right now he'd be tax free but if he waits it may not be the case. (However un/likely that apple shares rise 20%) – Carlos Bribiescas Nov 9 '14 at 6:10

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