a033  0039  03 Dec 74
Business Mirror 330, 2 Takes 630
By JOHN CUNNIFF
AP Business Analyst
    NEW YORK (AP) - Would you like to buy your kids a Christmas gift at
a discount? A gift that should last well beyond the six-hour destruct
time of so many toys? A gift that is educational and even profitable?
    ''Don't interrupt, there's more,'' said the salesman, an earnest
but gaunt figure. ''Listen,'' he said, and he related how this
simple, inexpensive gift might:
    ''Protect against inflation, help pa educational costs or provide
a start for a future business, teach the owner about our economic
system, probably inspire him to great wealth and . . .'' There was a
pause: ''Help a poor broker.''
    While almost every traditional gift is higher in price this year,
stocks are depressed, so much so that few people seem to be
considering them as gifts. Even the New York Stock Exchange has
dropped its holiday promotion.
    The Securities Industry Association, which speaks for brokers,
feels that this year might be a better time than ever to give shares
as gifts, mainly because of the bargain prices.
    Nobody can guarantee those prices wil rise again, but if the past
i a criterion there's a very strong likelihood they will. And
youngsters have a long time that can be used waiting.
    Giving gifts of stock to minors once was a complicated undertaking.
The share had to be registered in the child's name, leading to
difficulties when the minor attempted later to sell the securities or
reinvest dividends.
    Says the Securities Industry Association: ''A broker, bank,
transfer agent or any other person dealing with a minor who sought to
buy or sell securities did so at his own peril.''
    The great danger in the transaction was that the youngster
generally had the power to repudiate the contract or disaffirm the
sale upon reaching maturity.
    Now there are laws in every state that permit gifts to minors of
securities - and in some states gifts of insurance and annuity
contracts - with a parent retaining custodial responsibilities.
    MORE
    
0342aED 12-03
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a034  0051  03 Dec 74
NEW YORK Take 2 Mirror responsibilities 300
 
    The procedure, while simple - almost any brokerage house can handle
the transaction - is a serious matter. The giver never can take back
the gift, although the custodian may sell the securities if the
proceeds are used for the youngster's benefit.
    It is, says the association, ''a complete, irrevocable donation of
one's interest to another person.''
    While prices of many blue chips are low, a prospective buyer must
also consider that a commission must be paid. On orders of less than
$2,000 that commission is negotiable, which means it might pay to
shop around.
    Merrill Lynch, the largest brokerage house, offers this
illustration of charges on some small orders:
    One share at $15  share: About a $5 minimum
    10 shares at $15 a share: $8.14
    100 shares at $15 a share: $34.65
    Paine Webber, one of the top five retailers of stocks, says it
charges 10 per cent on odd-lot - less than 100 shares - orders under
$100, and the following formula on larger odd-lot orders:
    Purchase valued at $100 to $800: 2.3 per cent, plus $7.36
    $800 to $2,500: 1.495 per cent, plus $13.80
    $2,500 and above: 1.035 per cent, plus $25.30
    Orders should be placed well ahead of Christmas in order for the
transaction to be completed. Ordinarily it takes five business days
for the certificates to be readied and sent to the buyer.
    What prevents a parent from buying shares as custodian, thereby
escaping the taxes on dividends and appreciation, and then using the
proceeds for his own purposes?
    An association spokesman offered the opinion that some people might
do so, and probably get away with it. But he reminds any parent that
when the minor comes of age he or she might take the parent to court.
    Never forget, the stock market is a game of risks.
    
0347aED 12-03
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