Ask the Hammer: Tax Consequences to Selling Assets in an UTMA or UGMA

Jeffrey Levine, a CPA with Buckingham Wealth Partners, describes the tax consequences of selling assets in an UTMA or UGMA
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Jeffrey Levine, the director of advanced planning at Buckingham Wealth Partners, describes the tax consequences of selling assets in an UTMA or UGMA. 

What are the tax consequences of selling or exchanging assets in an American Century Giftrust fund?

According to American Century, that fund is an irrevocable trust that was set up (by a grantor) to be a one-time gift to another person (the beneficiary). The trust has a maturity date, which is when control of the money will transfer to the beneficiary. 

After the transfer, any sale or exchange of the assets in the fund will be a taxable event. The capital gains will be the sale price minus the purchase price plus reinvested dividends, according to Jeffrey Levine, the director of advanced planning at Buckingham Wealth Partners.

The good news. Some single taxpayers may not have to pay any tax on some or all of the capital gains associated with the sale or exchange of assets in an UTMA, UGMA, or Giftrut fund.

For tax years 2018-2025, the 0% tax rate on capital gains applies to married tax filers with taxable income up to $78,750, and single tax filers with taxable income up to $39,375.

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