Why Gifting Shares of a C-Corp is Not a Good Idea

By: Mark McLaughlin

Question:

My wife and I are in a good position. We don’t need much income. We have three kids and eight grandkids. One son farms with us. Our other two work outside the farm. We’re all different, but we get along great. We operate through a C corporation that holds machinery, grain, livestock, and a little land. Most of our land is owned outside the corporation. Our estate keeps growing beyond our needs, so we’re both thinking of gifting $18,000 of corporate stock to each child annually around Christmas. Is this a good way to start transferring the farm?

Solution:

It sounds like you’ve reached a rewarding stage of life, D.O.! It’s great that you want to start gifting. Before you begin, let’s sort out what’s “merry” with your Christmas plan and what’s not.