Thanks for the correction! Although, would this make a difference if you were just investing in an ETF and not selling and then gifting it to the child, assuming it’s less than the lifetime gift tax exclusion?

While you held the ETF you would be paying income taxes on the dividends at your marginal rates. If the kid holds it in a UTMA some of those dividends would likely be taxed at the lower kiddie bracket.

Agreed, the step up at death on the cost basis would be advantageous but then you have to be dead.