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The Formula Wealth Report

Capital Gains Got You Down?

Published 4 months ago • 1 min read

Navigating Your Financial Future Doesn't Have to be a Headache
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Hey Reader,

Ever get the feeling the tax code was written by people who assume you know a guy? Well… now you do!

Here’s a lesser-known move that could save your family tens of thousands in capital gains taxes—without needing an offshore account or a secret handshake! Winning!

Let’s say you own a stock that soared over the years. Great for your net worth. Not so great when you go to sell it and owe a huge chunk in capital gains.

Here's a trick to keep more of your money:

Instead of selling it, you gift the stock upstream to a parent. When they pass, the IRS gives that stock a step-up in basis—which basically means they pretend it was bought at today’s price. Then, when you inherit it back, it’s like the gains never happened! Pure magic!

Here’s what that looks like in plain English:

You give Mom your $100K in Google stock (original purchase price: $10K). She holds onto it. When she passes, the IRS acts like she bought it for $100K. You inherit it—zero capital gains. Cue the confetti and break out the bubbly!

A few things to keep in mind:

  • Your parent must actually own the asset at death. No handshake deals or "we’ll just say she had it" work here.
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  • They need to hold the asset for at least a year before passing—or the tax benefit disappears. (So maybe don’t try this on a Friday hoping it works by Monday.)
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  • This strategy works best when you and your parent work with the same advisor (hi 👋), to ensure everything is coordinated and clear.
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  • If Medicaid might be in the picture, skip this one—it can create complications.
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Want the asset to come straight back to you? Use a Transfer on Death account. It skips probate and makes sure your generous gift doesn’t end up with a long-lost sibling.
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Bottom line:

This move isn’t shady. It’s just smart! And for the right family, it can quietly erase a six-figure tax bill.

If you're wondering whether this could work for your situation, let's chat!

​Book a quick call here and we can talk about it!

Chad Holmes, CFP®, CPA, CPWA®

Founder | Financial Planner | Author

​www.formulawealth.com​

(901) 262-1281 Cell

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​Check Out The Inheritance Playbook​

Copyright (C) 2025, Formula Wealth. All rights reserved.​
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The Formula Wealth Report

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Short, simple action steps to help families like yours avoid probate, save on taxes, and be prepared when “the time” comes. It’s written with heart, a little humor, and zero fluff. If you want practical tips on being a good steward of your parents’ legacy (and your own), sign up here! MUST CONFIRM SUBSCRIPTION - CHECK SPAM FOLDER AFTER SUBSCRIBING FOR THE LINK!

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