Does any broker allow unprotected put options in a UTMA account?

F

fgopc1

I have highly appreciated put options I'd like to gift to my child to minimize capital gains taxes. [1] Unfortunately, I haven't found brokers (checked both Vanguard and Schwab) that allow UTMA accounts to hold unprotected puts [1]; therefore, they'll reject inbound transfers. [2]

Anyone know of a UTMA broker that allows unprotected puts to be transferred in?


[1] New tax code uses trust tax rates rather than parent's marginal rates, meaning you can save a lot transferring up to $11k/year in cap gains.
[2] Only lowest options level is allowed -- namely protected puts.
 
Talk to an accountant...I'm not sure exactly how, but puts are treated differently with respects to tax code and there's good reason to think that difference would apply to tax gifts.

Also, this forum is not the place to inquire about advice for investment time frames (if cap gains tax comes into play, you're not talking about trading time frames)...so take anything you read here with a grain of salt and talk to an accountant (and a reputable one...this question will require specialized knowledge and experience with similar situations)
 
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fgopc1 said:
I have highly appreciated put options I'd like to gift to my child to minimize capital gains taxes. [1] Unfortunately, I haven't found brokers (checked both Vanguard and Schwab) that allow UTMA accounts to hold unprotected puts [1]; therefore, they'll reject inbound transfers. [2]

Anyone know of a UTMA broker that allows unprotected puts to be transferred in?


[1] New tax code uses trust tax rates rather than parent's marginal rates, meaning you can save a lot transferring up to $11k/year in cap gains.
[2] Only lowest options level is allowed -- namely protected puts.
More...

In a UTMA account, you have "fiduciary responsibilities". There are certain "not alloweds", just as in IRA*s. It's not a matter of "does broker allow?". It's a matter of the laws/rules and not up to a broker in most cases.

*Not exactly the same. In self-directed IRAs, you're "allowed" to hose yourself in certain ways. UTMA accounts, because you're acting on the behalf of a minor, you're allowed less leeway to potentially screw up.
 
Cash secured short puts have limited downside, so they should in principle be allowed if you have enough cash in the UTMA account. I'd keep calling brokers to see if you can find out that allows this level of options activity. UTMA accounts are often treat like IRAs, so some options activity may not be allowed. Try E*TRADE and TD Ameritrade and see if you have any better luck.
 
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