|
Posted by bono9763@yahoo.com on December 16, 2006, 8:58 pm
Please log in for more thread options
> Following is an excerpt from a thread on a financial
> planning newsgroup, just curious what answers are
> forthcoming from the crowd here.
>>> Notwithstanding their relationship needs counseling, are
>>> there some provisions in the gift tax law I'm missing
>>> whereby parental support for a severally handicapped child
>>> (which isn't her situation anyway) is not considered a gift
>>> for gift tax purposes? I have been wondering, in general,
>>> what is the difference
> between a gift and support, and then this question came
> along to ask more or less the same thing.
>
> IRS Pub 950 states a gift is when you don't "[expect] to
> receive something of at least equal value in return".
>
> Might a specific property (including money) be both a gift
> and support in some situations? Whether or not it is
> taxable is not what I'm curious about in this context, just
> what the definition is.
>
> If a parent supports a minor child, since such support is
> usually presumed to be a legal obligation of the parent,
> does that mean it is not a gift? If someone supports a
> non-disabled adult child or some other relative, then what?
> What about supporting someone who is not related at all?
>
> What if you give money to someone, and then he supports
> himself with it? A gift, or support, or both?
>
> I made some effort to find this topic in IRS docs or
> on-line, and have not been successful... yet it seems a
> basic distinction that every tax pro should know. What am I
> missing?
Two issues come to mind in determining gift vs. support.
(1) Who maintains control of the asset? If you give up
control, that argues for a gift.
(2) What was the money used for? If I give you $1000 and you
put it in the bank, that doesn't count as support, because
it wasn't spent. But if you use it to pay the rent, then it
would count as support.
There are support worksheets out there to determine where
support comes from and what it is used for. Each situation
is unique, so facts and circumstances will likely play an
important role in deciding.
Dennis
<< ======================================================= >>
<< 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. >>
<< ======================================================= >>
| 
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap