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Posted by William Brenner on September 16, 2007, 3:27 am
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The son of a friend asked me this one.
In 2004, he became engaged to a young lady and gave
her an expensive diamond ring -- costing well above
the free gift limit in effect at that time. Good
citizen that he was, he duly filed a gift return.
Sadly, early this year, the wife died in childbirth.
Most of her assets, including the ring, were willed
to him. The ring was placed in a safe deposit box.
He recently became engaged to his late wife's sister,
who, for sentimental reason, requested that she be
given her late sister's ring. He was more than
willing to comply.
Query: Must he file a second gift return for the same
ring?
Bill
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Posted by Stuart Bronstein on September 16, 2007, 8:54 pm
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> The son of a friend asked me this one.
>
> In 2004, he became engaged to a young lady and gave
> her an expensive diamond ring -- costing well above
> the free gift limit in effect at that time. Good
> citizen that he was, he duly filed a gift return.
>
> Sadly, early this year, the wife died in childbirth.
> Most of her assets, including the ring, were willed
> to him. The ring was placed in a safe deposit box.
>
> He recently became engaged to his late wife's sister,
> who, for sentimental reason, requested that she be
> given her late sister's ring. He was more than
> willing to comply.
>
> Query: Must he file a second gift return for the same
> ring?
In most states courts have held that engagement rings have
to be returned if the wedding doesn't take place. That
means that the gift of the right isn't complete until after
the wedding takes place.
Until a gift isn't complete, no gift is considered "made" so
no gift tax return is required. By the time the gift
becomes complete the couple are married. And a gift tax
return is not required for gifts between spouses, since
there is an unlimited gift tax exemption for such gifts.
T`he short answer is, in my opinion, no, a gift tax return is almost
never required when an engagement ring is given, irrespective of
value.
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 joetaxpayer on September 16, 2007, 8:54 pm
Please log in for more thread options William Brenner wrote:
> The son of a friend asked me this one.
>
> In 2004, he became engaged to a young lady and gave
> her an expensive diamond ring -- costing well above
> the free gift limit in effect at that time. Good
> citizen that he was, he duly filed a gift return.
As I understand engagement rings, they are not considered a completed
transaction (gift) until the marriage takes place. If the wedding is
called off, there is an expectation that the ring is returned, not kept,
or sold on eBay. As long as the wife is a citizen, there is no limit on
gifts between husband and wife. I don't see that the first gift return
was needed. If the marriage was canceled and the ring returned, would
she have filed a gift return to give it back?
JOE
www.joetaxpayer.com
<< ------------------------------------------------------- >>
<< 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 Herb Smith on September 16, 2007, 8:54 pm
Please log in for more thread options wrote:
> The son of a friend asked me this one.
>
> In 2004, he became engaged to a young lady and gave
> her an expensive diamond ring -- costing well above
> the free gift limit in effect at that time. Good
> citizen that he was, he duly filed a gift return.
>
> Sadly, early this year, the wife died in childbirth.
> Most of her assets, including the ring, were willed
> to him. The ring was placed in a safe deposit box.
>
> He recently became engaged to his late wife's sister,
> who, for sentimental reason, requested that she be
> given her late sister's ring. He was more than
> willing to comply.
>
> Query: Must he file a second gift return for the same
> ring?
Yes. Keep in mind that the "cost basis" of the gift will
have been adjusted to the DOD of the first recipient and
that the "taxable gift" amount is determined against the
current gift limit. Until he has made over $1 M of such
taxable gifts, he won't owe any gift tax.
H`owever, if he waits until the nuptials to formally "gift" the ring,
it would not be subject to any gifting limit. Gifts between spouses
are not taxable, regardless of size.
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Harlan Lunsford on September 16, 2007, 8:54 pm
Please log in for more thread options William Brenner wrote:
> The son of a friend asked me this one.
>
> In 2004, he became engaged to a young lady and gave
> her an expensive diamond ring -- costing well above
> the free gift limit in effect at that time. Good
> citizen that he was, he duly filed a gift return.
>
> Sadly, early this year, the wife died in childbirth.
> Most of her assets, including the ring, were willed
> to him. The ring was placed in a safe deposit box.
>
> He recently became engaged to his late wife's sister,
> who, for sentimental reason, requested that she be
> given her late sister's ring. He was more than
> willing to comply.
>
> Query: Must he file a second gift return for the same
> ring?
What's his, is his and if the value exceeds the gift tax
threshold, then yes.
ChEAr$,
Harlan
<< ------------------------------------------------------- >>
<< 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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