Gifts, Inheritance, and Stocks

Both are "passing your property to another person without compensation." The difference is just one thing: timing.

A "gift" is given while alive, and "inheritance" is left behind when you pass away. So if your parents buy stock in your name while they're alive, it's a gift; if they pass it down as they die, it's an inheritance.

Both carry tax. The names differ—gift tax and inheritance tax—but the rate structure is identical at 10–50%. However, "how much is deducted (subtracted)" and "who files" differ, so it's worth knowing them separately.

What's important is that even if a parent puts money into a child's account to buy stock, tax law can view it as a "gift." It's a domain where "we're family, so what's the harm" does not apply.

Fortunately, within a family you can give a certain amount without tax. This is called the "gift property deduction." And this deduction is calculated "summed over 10-year units."

As of July 2026, the deduction limits are as follows.

① To a spouse: 600 million won ② To an adult child (lineal descendant): 50 million won ③ To a minor child: 20 million won ④ Other relatives: 10 million won

For example, an adult child can receive up to 50 million won combined over 10 years from their parents without gift tax. Once 10 years pass, the deduction limit revives. That's why there are many cases of giving little by little on a 10-year cycle from a young age.

For reference, money parents give upon marriage or the birth of a child may additionally be deducted up to 100 million won under the "marriage/childbirth gift property deduction" (separate from the basic deduction).

The most confusing thing when gifting stock is "so how much are you deemed to have given?" Because the price rises and falls every day.

The Inheritance and Gift Tax Act values listed stocks like this: "the average of daily closing prices over a total of 4 months—2 months before + 2 months after the gift date (the valuation base date)." It means it's not just the single closing price on the gift day.

Why do it this way? If only one day's closing price were used, tax could be distorted by a value that happened to spike or crash that day, so a period average secures objectivity. Because of that, "if the stock price rises sharply over the 2 months after the gift," tax can come out higher due to a valuation increase you didn't know about at the time of the gift.

For the same reason, a time when the stock price has fallen a lot is relatively when a lower valuation comes out. However, this is not a statement of "when to buy" but an explanation that "the valuation method is designed this way."

The rate is applied to the amount remaining after the deduction (the tax base). Gift tax and inheritance tax are identical, with the five-bracket progressive rates below.

① 100 million won or less: 10% ② 100 million–500 million won: 20% (progressive deduction 10 million won) ③ 500 million–1 billion won: 30% (progressive deduction 60 million won) ④ 1 billion–3 billion won: 40% (progressive deduction 160 million won) ⑤ Over 3 billion won: 50% (progressive deduction 460 million won)

"Progressive" means it doesn't multiply the whole amount by one rate but divides by bracket and applies lower rates to lower brackets. The calculation is done simply as "tax base × rate − progressive deduction."

For example, if an adult child receives 150 million won worth of stock from a parent, subtracting the 50 million won deduction gives a tax base of 100 million won. Applying 10% here makes the gift tax about 10 million won. In practice, with a tax credit for voluntary filing within the deadline, it can differ slightly.