Transfer & structure
Gifting Startup Shares to Family
A gift carries over your original basis to the recipient — the opposite of an inheritance's stepped-up basis.
What it is
Transferring shares to a family member as a gift (rather than a sale) triggers no immediate capital gain for the giver, but the recipient generally takes on the giver's original cost basis and acquisition date — a "carryover" basis, not a stepped-up one.
Why it matters for a secondary
A common estate-planning move for appreciated illiquid stock, but gift-tax reporting (Form 709) can be required above the annual exclusion amount, and unlike an ordinary secondary sale to an unrelated buyer, a qualifying gift can actually preserve QSBS eligibility for the recipient in many cases — a genuine exception to the "QSBS doesn't transfer" rule covered in the QSBS deep dive.
Quick facts
- Recipient's basis
- Carryover — same as the giver's original basis, not stepped up
- Gift tax reporting
- May require Form 709 above the annual exclusion amount — confirm the current figure
- QSBS treatment
- A qualifying gift is one of the few transfer types that CAN preserve QSBS eligibility for the recipient
Common mistake: Confusing a gift's carryover-basis treatment with an inheritance's stepped-up basis — the two are opposite, and mixing them up misstates the recipient's future gain.