Tax question for transfer of stock

My wife and I own some stock that we plan to transfer to our young grand daughter. Our basis in this stock is about $2000 and the stock is now worth about $16,000. We are not selling the stock to the grand daughter but just gifting it to her as a stock transfer.

I realize there are no gift tax issues here since the gift is less than $24,000.

My question is this. What if anything do I report on my individual income tax return for 1040 form for 2008? One "friend" said that I should report that I sold the stock for $1.00 a share and then take a loss on the 1040. But I am sure this is bad advice. My initial feeling is that I just do nothing on the 1040 form since I am in effect just gifting my basis in the stock to the grand daughter.

Thanks in advance for your thoughts and comments.

cebceb

No reporting is necessary. Your granddaughter will continue with your original basis in the stock.

One "friend" said that I should report that I sold the stock for $1.00 a share and then take a loss on the 1040. But I am sure this is bad advice.
You are right to be skeptical, because this one of the biggest myths of gifting out there. It won't work.

A stock is easily valued with a share price. Since the share price is more than $1, anything above that amount is simply considered a gift by the IRS. A sale must be recorded at fair market price to recognize a loss.

Thanks for the advice. I mailed the transfer forms today to transfer the stock to my granddaughter. She will then assume my basis in the stock. I trust that she will see much growth in the value of this stock over the coming years.

Thanks, cebceb