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Posted by curiousgeorge408 on February 26, 2008, 11:03 am
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Suppose a single parent wants to give $60K to an adult
daughter (not a dependent). Normally, today, that would
mean that $48K is subject to gift tax (less unified credit,
ya-da-ya-da).
But suppose that instead, the parent gives $10K to each
of 4 adult grandchildren and to another adult child, then
each person decides to give $10k each to the daughter.
Ostensibly, none of the $60K is subject to gift tax because
each person's gift is below their annual exclusion amount.
Is that legal?
It seems like "laundering". But how could the IRS prove
it?
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Posted by Stuart Bronstein on February 26, 2008, 11:18 am
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curiousgeorge408@hotmail.com wrote:
> Suppose a single parent wants to give $60K to an adult
> daughter (not a dependent). Normally, today, that would
> mean that $48K is subject to gift tax (less unified credit,
> ya-da-ya-da).
>
> But suppose that instead, the parent gives $10K to each
> of 4 adult grandchildren and to another adult child, then
> each person decides to give $10k each to the daughter.
>
> Ostensibly, none of the $60K is subject to gift tax because
> each person's gift is below their annual exclusion amount.
>
> Is that legal?
It's certainly legal. However it will not achieve your goal, since the
IRS will collapse the transaction and treat it as a single gift from
parent to child of $60,000.
Stu
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<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Bill Brown on February 26, 2008, 12:09 pm
Please log in for more thread options > curiousgeorge...@hotmail.com wrote:
> > Suppose a single parent wants to give $60K to an adult
> > daughter (not a dependent). Normally, today, that would
> > mean that $48K is subject to gift tax (less unified credit,
> > ya-da-ya-da).
>
> > But suppose that instead, the parent gives $10K to each
> > of 4 adult grandchildren and to another adult child, then
> > each person decides to give $10k each to the daughter.
>
> > Ostensibly, none of the $60K is subject to gift tax because
> > each person's gift is below their annual exclusion amount.
>
> > Is that legal?
>
> It's certainly legal. However it will not achieve your goal, since the
> IRS will collapse the transaction and treat it as a single gift from
> parent to child of $60,000.
>
I disagree. The OP describes an illegal conspiracy to engage in tax
fraud. If the IRS notices and gift tax is due from the lead
conspiritor, it will surely assess civil fraud penalties on top of the
gift tax.
--
<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Stuart Bronstein on February 26, 2008, 12:35 pm
Please log in for more thread options >> curiousgeorge...@hotmail.com wrote:
>> > But suppose that instead, the parent gives $10K to each
>> > of 4 adult grandchildren and to another adult child, then
>> > each person decides to give $10k each to the daughter.
>>
>> > Ostensibly, none of the $60K is subject to gift tax because
>> > each person's gift is below their annual exclusion amount.
>>
>> > Is that legal?
>>
>> It's certainly legal. However it will not achieve your goal,
>> since the IRS will collapse the transaction and treat it as a
>> single gift from parent to child of $60,000.
>
> I disagree. The OP describes an illegal conspiracy to engage in
> tax fraud. If the IRS notices and gift tax is due from the lead
> conspiritor, it will surely assess civil fraud penalties on top of
> the gift tax.
It's only tax fraud if he actually attemps to get five annual
exclusions for a single gift. The act of making four gifts with the
expectation that they will be given to a fifth person, in itself, is
not illegal.
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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Paul Thomas, CPA on February 26, 2008, 12:48 pm
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> with the expectation
And that is what the courts have said makes it ~~one~~ transaction. A gift
tax return is due.
"illegal"?? They won't cuff you if that's what you think.
--
Paul A. Thomas, CPA
Athens, Georgia
--
<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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