Discussion:Taxpayer and Mother open joint checking
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Vermontcpa (talk|edits) said: | 19 August 2007 |
| account at bank with $30k deposit from Mother. Mother leaves USA and daughter (TP) gets a cashiers check out for the $30k. Is anything taxable in this scenario? | |
Vermontcpa (talk|edits) said: | 19 August 2007 |
| so the first $12k is tax free gift and the rest is a taxable gift for 2007. Am I correct? | |
| 19 August 2007 | |
| This will generate a gift tax but no gift tax will be due until they reach the threshold for lifetime gifts...is there a spouse involved in this 30K gifting? | |
Vermontcpa (talk|edits) said: | 19 August 2007 |
| No Mother is without spouse. So does a gift tax return have to be filed for 2007 based off of above scenario?
Thanks ss | |
| 19 August 2007 | |
| Yes, now you must report all gifts to daughter during the year, not just this one. So include Christmas, birthday, etc. Also, client must report all charitable gifts on gift tax return if one is necessary for other reasons (although there is a charitable deduction for them, they must still be reported).
I would suggest you read up on Form 709 and maybe take a class on gifts. There is quite a lot to know. | |
Vermontcpa (talk|edits) said: | 19 August 2007 |
| Thanks Kevin. No experience w/ gift tax returns as of yet. | |
| 19 August 2007 | |
| I have only done one gift return and Kevin is right on...even though it is informational due to the lifetime exclusion, it still is very complicated...but so are 1040's on some days...hehehe | |
| 19 August 2007 | |
| Oh and my question about if it is a gift or not, pertained to if the mom-daughter were in business or if it was a return of some sort of monies previously taxed, etc. etc. etc.....hehe | |
| 19 August 2007 | |
| Regarding charitable gifts, I have prepared a number of 709s, especially while working for a firm listed in the top 100 in the US, and we never reported DIRECT gifts to charities, only split-interest charitable gifts. Of course, most gifts are under the annual exclusion, anyway. But, in reading a 2004 outline on a speech given by a Senior Tax Director at PPC, he states: "There is no longer a requirement to file a gift tax return for charitable gifts as long as the property given to charity qualifies for the Sec. 2522 gift tax deduction." 2522 covers most gifts!
I agree that the 709 instructions are evasive. What are you folks doing in your practices if a charitable (outright) gift exceeds $12G? | |
| 20 August 2007 | |
| Sorry, Wes and Ozzie, but I think that is incorrect. I hate to quote pubs as authority, but the instructions for Form 709 (page 2) state "If you are required to file a return to report noncharitable gifts and you made gifts to charities, you must include all of your gifts to charities on the return." Page 8 also states to include all gifts to charities (if a return is required). | |
| 20 August 2007 | |
| I as well had filed quite a few 709s while working for a large firm and never included charitable gifts. Anyone else? | |
| 20 August 2007 | |
| I'm not saying that anyone actually follows the instructions (heck, most guys won't even read them), I'm just saying that the requirement is there. Of course, when I am teaching a topic, I have to teach how to do it correctly, not how to do the real life shortcuts. | |
| August 20, 2007 | |
| Huh. Never heard that one. Someone reads the instructions? Oh, Kevin, of course. | |
| 20 August 2007 | |
| Hi never reported, seen nor heard of a charitable gift being put on a 709 in 30 years of practice and right or wrong dont intend to start now. I have never heard of a penalty as well. Maybe real life short cuts should be mentioned. bye | |
| 20 August 2007 | |
| Wes, we do discuss your viewpoint when we do the 2 hour "ethics" portion of the class. LOL.
I'm not poking fun at you specifically, I'm poking fun at all of us in general. We all think we are so moral and ethical, but yet we justify not following the rules by saying "everybody does it" or "30 years and I haven't been caught yet" and somehow we think that when we say these things it is OK, but when someone else says these things they are "bad people". We know where to draw the line but others don't. When we do it it is a little "grunt" but when others do it it is an "oink".
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Actionbsns (talk|edits) said: | 20 August 2007 |
| Kevin your comments remind me of an incident several years ago that I had with one of my payroll clients. I, admittedly, misunderstood how to applies the rules regarding depositing payroll taxes within 3 days or twice a month, something about that. We thought we were in compliance for about 5 years, when suddenly someone at IRS realized we weren't. I had a phone conversation with someone at IRS who was calculating a penaly for two or three quarters when I suddenly had an urge to use the "but we've been doing it this way forever" and just as quickly bit my tongue and just SHUT UP!. In the end we were panalized for three quarters, I think, which I paid and we don't do it that way anymore. | |
| 20 August 2007 | |
| Above it is stated that "Mother leaves the USA." If the mother is a nonresident alien for gift tax purposes (i.e., if her domicile is outside the U.S.), then any amount of a gift above 12K would be fully taxable without the benefit of a credit. Nonresident aliens do not get the $1,000,000 life-time exemption for gifts. Sec. 2505 | |
| 20 August 2007 | |
| But I believe that mother is still a US citizen; not a NRA.... | |
