Gift of Stocks in a Capital Loss Postion

[joeinusa]

When my children were young, there were no 529 plans and I set them up with a stock portfolio meant to help pay for their education. One of the stocks was Nortel. About $7000 worth of stock now worth much less than $50.

If they sell this stock or if Nortel (in bankruptcy protection currently) is declared bankrupt, they will each have capital losses. They have part-time jobs and some investment income from other stock. Since income is small $2000 to 4000, little or no tax even without out a capital loss.

If they were able to save these capital losses for several years until they are finished university and earning a good salary, these capital losses would be worth much more to them.

Question 1: Can they avoid using the capital losses to reduce income to zero in next few years until their incomes are higher?

Question 2. Could they give this stock (as long as it is done before the possible declaration as worthless) to their parents and their parents use those losses.

We are all North Carolina residents.