ARTICLE TAKEAWAYS
A gift of shares can be made via either:
If the donor is a current investor with an account at Capital Group, a gift of shares to the recipient can be made at the donor's current breakpoint (sales charge based on the donor’s rights of accumulation). The request to apply the donor's breakpoint must be made in writing at the time of the investment and may require a signature guarantee.
Excluding certain employer-sponsored plans, anyone can make a purchase of shares to another individual. This investment may be considered a gift and subject to the annual gift limits and exclusions. Consult your tax advisor for a final determination.
All investments must follow Capital Group’s applicable policies and guidelines for new accounts or investments into an existing account.
For gifts of American Funds shares that are transferred from an existing Capital Group account, the shares must be transferred in kind, and the recipient must agree to accept the cost basis of the shares.
Complete the Gift of Shares Request (to an American Funds Account) (PDF) to gift shares to an individual or an entity’s existing account.
If the receiving party does not have an existing account, an account application is required to establish the account to receive the funds. Learn how to open a new account.
For gifts of American Funds shares to a charitable organization, the donor and the recipient must both complete the Gift Transfer of Shares to a Charitable Organization (PDF). Return the form along with a copy of the 501(c)(3) federal determination letter verifying that the organization is tax-exempt or a government-issued document verifying the existence of the business. A signature guarantee is required.
Accounts eligible to receive transferred shares as a gift:
* The account type is subject to contribution limits.
** The IRA owner must have taxable compensation, and the IRA is subject to contribution limits.
Note: A gift of shares cannot be made into an employer-sponsored retirement plan.
Generally, for gifts of property into nonqualified account types between living people during the calendar year, federal tax is assessed.
Based on a contributor’s tax-filing status, certain amounts can be excluded as being counted as a gift for tax purposes. These are known as the gift tax exclusion limits. For 2024, the exclusion limits are:
Special rules for CollegeAmerica:
* The 5-year election allows a contributor to gift up to their limit during 1 calendar year and treat the gift as having been made over 5 years. No additional gifts can be made to that beneficiary over the next 4 years after the year in which the one-time gift is made. If the donor of an accelerated gift dies within the 5-year period, a portion of the transferred amount will be included in the donor’s estate for tax purposes.
Consult a tax advisor regarding your specific situation.
For nonqualified accounts, including individual, joint and UGMA/UTMA, since the recipient of the shares agrees to accept the cost basis, once the shares are withdrawn, Form 1099-B is generated under the recipient’s Social Security number or taxpayer identification number to report any capital gains or losses.