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Subject Author Date
Gift Tax Question Ron Rosenfeld 03-08-2007
|--> Re: Gift Tax Question Stuart A. Brons...03-10-2007
Posted by Ron Rosenfeld on March 19, 2007, 2:23 am
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> There are different kinds of trusts and they are useful for
> different kinds of purposes. The most popular, a revocable
> living trust for estate planning purposes, is, as you
> suggest, of little practical value until both spouses have
> died. However by that time it's too late to save the tens
> or sometimes hundreds of thousands of dollars that can be
> lost to taxes and probate courts.
>
> The reason I suggested an irrevocable trust is to have a
> situation in which filing a gift tax return is required, to
> start the statute of limitations. There may be another
> option. If the gifts are going to be more than $12,000 per
> donnee, and you don't live in a community property state,
> you and your wife can file a gift tax return and elect to
> "split" the gift. That is that the gift be considered half
> from each of you even though tecnically the money not belong
> to each of you equally.

Thank you for that information.

Although we are not in a community property state, we do own
all significant stuff jointly. The only exceptions are or
IRA's and our vehicles.

Could you explain what "statute of limitations" means in
this situtation? I don't know what it means with regard to
gifting or irrevocable trust.

--ron

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Posted by Stuart A. Bronstein on March 19, 2007, 11:12 am
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> Although we are not in a community property state, we do own
> all significant stuff jointly. The only exceptions are or
> IRA's and our vehicles.

For this purpose not being in a community property state can
help you. But you really should consult a local tax advisor
to be sure.

> Could you explain what "statute of limitations" means in
> this situtation? I don't know what it means with regard to
> gifting or irrevocable trust.

There is basically a three year period after filing a gift
tax return that the government has the power to challenge
that return (assuming it wasn't fraudulent).

If you don't file a return, the government can in theory
audit your gift at any time. If they do that they could
determine, for example, that the gift was all made in the
first year, even though deeds were given for less than the
exemption amount, because the plan to make the gifts was
created at that time.

Or they could decide that your kids really had no control
over the property when you made the gifts, so the gifts were
of a future interest, which would not then qualify for the
annual exclusion.

These kinds of things are not likely, but they are possible.
And filing a gift tax return, if you can do it in a way
that doesn't make them even more suspicious, is cheap
insurance.

I'm sure others here, those who actually prepare tax
returns, will have more to add.

Stu

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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<< to this newsgroup as well as our anti-spamming policy >>
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Posted by Ron Rosenfeld on March 20, 2007, 1:28 am
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>> Although we are not in a community property state, we do own
>> all significant stuff jointly. The only exceptions are or
>> IRA's and our vehicles.

> For this purpose not being in a community property state can
> help you. But you really should consult a local tax advisor
> to be sure.

>> Could you explain what "statute of limitations" means in
>> this situtation? I don't know what it means with regard to
>> gifting or irrevocable trust.

> There is basically a three year period after filing a gift
> tax return that the government has the power to challenge
> that return (assuming it wasn't fraudulent).

Thanks.

You've given me some things to ponder.

Best wishes,
--ron
--ron

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Stuart A. Bronstein on March 12, 2007, 8:34 pm
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> Ron Rosenfeld wrote:

>> Given the appreciation, we'd have to gift it to them over a
>> few years, but that should not be an issue.

> No need to do that. If you make the gift, you'll need to
> file a gift tax return, but chances are high that you'll pay
> no tax.

No tax currently. But if they have an estate that's large
enough, it could increase the amount of estate tax they will
eventually have to pay.

The problem with gifting over time is that you either need
to get an appraisal each year when you make the gift, or be
sure you give an amount low enough that there will be no
question that it's less than the annual exclusion amount.

In this case there are two donors and two donees, which
means (at the current level for the exclusion) they can give
up to $48,000 in value to them per year.

Stu

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by BeanTownSteve on March 12, 2007, 4:53 am
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> If we were to give it to our children, how do we value the
> property for gift tax purposes? What would their basis be?
>
> "We" are husband and wife.

<snip>

No one seemed to mention........ If they need it now that's
one thing. They are going to bulid/farm/ranch it etc.

If you're trying to plan for the future and move assets to
"settle" your estate, letting them inherit the land "steps
up" the basis to the value at that point in time.

That is for example, if the land is worth $1M- -no one pays
gains tax on the increase. Might want to gift them
something else, BUT you also have to consider the estate tax
potential overall.

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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