1. breach of fiduciary duty for the younger child.
Once you gifted the money to your younger child into his UGMA, it is his money and you are merely acting as a fiduciary (受托人）. I don't think your younger child could give a informed decision of giving away his/her money to his/her sibling, so essentially you are stealing his/her money to give them to your older child.
You don't need to laugh, you are trying to get around $17000 gift tax allowance, so we are in legal domain.
2. evasion of taxation
If it is shown that you performed bad act (such as breach of fiduciary duty), the finding of evasion of taxation is the next step.
3. It is unnesessary to do what you did. Gift tax exemption is 11 million per person.
Every year you can gift $17,000 to anyone WITHOUT any tax consequences. However, it doesn't mean any gift above $17000 is taxable. In US federal tax code, gift tax is combined with estate tax that has an exemption of 11 million per person. That is to say, you can give away 11 million during your life time OR after your death, without paying gift/estate tax.
So if you give your older child $37000 per year, the $17,000 is completely invisible to tax return. The $20000 ($37-17) has to be reported in your tax return gift form 709, and it will be added up every year. If your lifetime accumulated gift amount is less than 11 million, you don't have to pay any gift tax when you are live. After your death, your estate will be combined with all the gifts you reported during your lifetime (remember that's after $17000 annual gift allowance), and if the amount is less than 11 million, your estate don't pay any estate tax.
In general when gifting a property, donee (your child) recevies the cost basis of the donor.
The only time the donee doesn't pay capital gain tax is the one time when they inherit from your estate after your death. This is called step-up basis.
You need to sharpen up your googling skills. All these answers are readily available if you do a simple search. e.g."capital gain tax stock gift". In this information age there is no reason not to do a search before you ask other people. What you did was going down the wrong path and designed a very flawed scheme on false assumptions, and then I'd have to unwind your flawed scheme and false assumptions. Next time when you think of an idea, verify the basic premise before you build a house of cards.
The IRS sets specific limits on the type of income and the tax rates. Earned income will be taxed at the child's rate above their applicable standard deduction, which is equal to their earned income plus $400 (or $1,250, whichever is greater), up to a maximum of $13,850 in 2023. But investment income is a more complicated formula. Unearned income from interest, dividends, and capital gains are taxed in tiers defined by the IRS.
For a child with no earned income, the amount of unearned income up to $1,250 is not taxed in 2023. The next $1,250 is taxed at the child's rate. Any amount above $2,500 is taxed at the parents' rate.
These rules cover children under the age of 18, and also those up to the age of 24 who are full-time students.
各位老师：按2023年的规定，你可以给一个人$17,000美元，而不用缴gift tax。夫妇就可以给同一个人$34,000。不仅是钱，也可以是股票。那么理财专家说，如果给孩子股票，那么孩子卖了股票的Profit也不用缴税。
我这里有一个问题，比如我有两个孩子，我们夫妇给两个孩子每人上满$34,000的股票。我的问题是：可不可以从老二的这个账户给他哥哥姐姐钱，使得他哥哥姐姐一年有了$68,000去缴学费什么的（注意我这么做看重的是股票收益不交税，我已经知道家长给孩子付学费是不算作gift的了，但是想把股票转给孩子）。然后几年后等哥哥姐姐毕业了，哥哥姐姐再把自己那每年$34,000也给弟弟妹妹缴学费？
这里的难点主要是：老二是未成年人，minor。不知道这种操作行不行。
Thanks in advance!
1. breach of fiduciary duty for the younger child.
Once you gifted the money to your younger child into his UGMA, it is his money and you are merely acting as a fiduciary (受托人）. I don't think your younger child could give a informed decision of giving away his/her money to his/her sibling, so essentially you are stealing his/her money to give them to your older child.
You don't need to laugh, you are trying to get around $17000 gift tax allowance, so we are in legal domain.
2. evasion of taxation
If it is shown that you performed bad act (such as breach of fiduciary duty), the finding of evasion of taxation is the next step.
3. It is unnesessary to do what you did. Gift tax exemption is 11 million per person.
Every year you can gift $17,000 to anyone WITHOUT any tax consequences. However, it doesn't mean any gift above $17000 is taxable. In US federal tax code, gift tax is combined with estate tax that has an exemption of 11 million per person. That is to say, you can give away 11 million during your life time OR after your death, without paying gift/estate tax.
So if you give your older child $37000 per year, the $17,000 is completely invisible to tax return. The $20000 ($37-17) has to be reported in your tax return gift form 709, and it will be added up every year. If your lifetime accumulated gift amount is less than 11 million, you don't have to pay any gift tax when you are live. After your death, your estate will be combined with all the gifts you reported during your lifetime (remember that's after $17000 annual gift allowance), and if the amount is less than 11 million, your estate don't pay any estate tax.
这里的关键是卖股票的收益如何合理合法避税。如果我把股票给孩子，他们是不是就可以不用缴capital gain tax了呢？
In general when gifting a property, donee (your child) recevies the cost basis of the donor.
The only time the donee doesn't pay capital gain tax is the one time when they inherit from your estate after your death. This is called step-up basis.
You need to sharpen up your googling skills. All these answers are readily available if you do a simple search. e.g."capital gain tax stock gift". In this information age there is no reason not to do a search before you ask other people. What you did was going down the wrong path and designed a very flawed scheme on false assumptions, and then I'd have to unwind your flawed scheme and false assumptions. Next time when you think of an idea, verify the basic premise before you build a house of cards.
外行人就连用什么关键字在google上搜索都不知道，所以，您见谅吧。愚弟中美名校计算机毕业，号称搜索大王，远远超过所有人，能从网上犄角旮旯抠出信息，但仍然不得已到文学城请教高人，就说明了跨行业的局限性！
But if this capital gain thing is below the young man's standard deduction (since he doesn't have any other income), it's tax free right?
这是因为你给孩子gift可以免gift tax，如楼上说的，其实一辈子可以免1100万美元，那孩子本身大学生没收入，ta卖了股票的captial gain只要低于standard deduction（两万美元左右），就可以不交税是吧。
https://www.foxbusiness.com/personal-finance/how-pay-zero-percent-tax-rate-capital-gains
这一招还是薯老爷几年前在这里宣扬的。几个月前薯老爷冒了一个泡怎么又不见了？
Minors Capital gain, interest income more than $2200, report on parent's return
What tax rate will my child pay?
The IRS sets specific limits on the type of income and the tax rates. Earned income will be taxed at the child's rate above their applicable standard deduction, which is equal to their earned income plus $400 (or $1,250, whichever is greater), up to a maximum of $13,850 in 2023. But investment income is a more complicated formula. Unearned income from interest, dividends, and capital gains are taxed in tiers defined by the IRS.
For a child with no earned income, the amount of unearned income up to $1,250 is not taxed in 2023. The next $1,250 is taxed at the child's rate. Any amount above $2,500 is taxed at the parents' rate.These rules cover children under the age of 18, and also those up to the age of 24 who are full-time students.
全搅和一块儿了。 害人！
custodian account算在孩子头上，不是父母头上，但孩子的税率，因为kiddie tax, 按父母税率缴。
IRS Topic No. 553, Tax on a Child's Investment and Other Unearned Income (Kiddie Tax)：
https://www.irs.gov/taxtopics/tc553