Discussion:* House Buyout *

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  • House Buyout *


BeatleFred (talk|edits) said:

24 January 2007
Hello:

My situation is that I want to do a buyout with my two older brothers so that I can become the sole owner of the house that my parents bought in 1970 (for $25K). I have always lived in the house. My brothers moved out a long time ago. After my mother passed away two years ago, my father, now age 87, moved back to his native country in Europe, but he has a life estate to the house here in Queens, New York.

Due to skyrocketing increases in home prices in the past several years, I am not able to afford a buyout at the house's current value (approximately $510K). My brothers have agreed to accept a buyout at $240K, which means each brother would get $120 ea from me after I obtain a mortgage loan. In the event I ever sell the house in the future, it would be put in legal writing that I would pay them back (2007 appraised value/3)- $120K.

My question simply is: if I do the buyout and pay each brother $120, do they have to pay Taxes on it? The oldest brother lives in Florida if that means anything.

Typo: should be a K after 120, or: $120,000. (not a mere $120).

Glmpllc (talk|edits) said:

24 January 2007
It seems there is a transaction missing. You say your father has retained a life estate in the home. What happened when your mother passed away? Was the home only in her name and left to the three kids with a life estate reserved for dad? I ask the question because, while possible, that seems unusual.

Are you and your brothers current owners of the home? If you are and you do the transaction as stated, you have created taxable income for them. How much and of what nature can't be determined from your facts. Basis could be approximately fmv (if received from mom on her passing) or very low (if received as a gift).

Enough money is involved here to seek professional assistance in structuring the transaction. While many of us here are tax professionals, our advice is only as vaulable as what you pay for it.

Good luck.

BeatleFred (talk|edits) said:

24 January 2007
The house was in my parents name. Their original 1973 Will was updated in late 2004, two months

before my mother passed away in the hospital. A life estate was created at that time when the Will was updated. The concern at the time was to transfer ownership so that if my parents were ever to go into a nursing home, the nursing couldnt take the house from them.

Since my mothers' passing, the situation is that my father and us 3 brothers are all equal owners of the house. My father would probably have to give up his life estate in order to do the legalities of the buyout, though he does not object to doing so.

My brothers are making a concession by accepting a buyout for significantly less than the house's current market value. The problem is I cant afford to pay each of them anymore than $120K and I dont think they will accept anything less than that amount. I am quite sure they would unhappy to have to pay Taxes on the $120K, thus the buyout might be rejected.

Thats why I asked the question. I was hoping that they wouldnt have to pay the taxes, or some kind of way could be arranged to atleast minimize them.

Glmpllc (talk|edits) said:

24 January 2007
You are certainly doing the right thing in seeking advice. The best advice I can give you is that your facts are too complex and the transaction too important to base any decisions on advice you receive anonomously from any website, including this one.

Seek professional help. Pay for an hour or two of a CPA or attorney's time. If you choose the professional wisely, it will be money well spent.

BeatleFred (talk|edits) said:

24 January 2007
I already have been seeing a financial advisor. I asked him the question and he told me to tell my

brothers to ask an accountant what the answer was.

I dont see why its so complicated to get a simple yes or no response to the question. In a buyout, if a family member pays money to another family, do taxes have to be paid on the money they receive?

Dennis (talk|edits) said:

24 January 2007
If you do the transaction now your brothers will recognize gain on the difference between current payment and your father's basis which could be as little as $25000 (pre-Gallenstein). They will recognize imputed interest on the balance to be paid until payment is made and recognize additional gain at that time. If you wait until your father passes away (assuming he is a US citizen) the three of you will get a step up in basis to fair market value and there will be no gain recognition.

BeatleFred (talk|edits) said:

24 January 2007
Dennis:

Thanks for the reply. But the technical language is difficult to understand, for example, I have no idea what "pre-Gallenstein" means (perhaps I can learn what it means by doing a Google search on the term).

My father is a US citizen, but also has dual citizenship, as he now lives in the Czech republic, where he was born. (the dual citizenship is an advantage to receiving less expensive medical coverage there).

Can anyone "cut to the chase" here, and just let me know if taxes have to be paid by my brothers on the $120K they receive from me? Its either one or the other: YES or NO?? (& does it matter if one brother lives in Florida, but the house is in NY, in terms of having any effect on his taxes in the buyout?)

From Dennis's response, I am trying to interpret correctly if what he's saying is, my brothers will pay less taxes if the buyout is done in the future after my father passes away, though if thats so, I dont see why it should be different than doing it now. ??

My brother in Fla read an email I sent him earlier tonight, and he said he will consult a tax accountant, so I hope to find the answer soon.

TaxManager (talk|edits) said:

24 January 2007
You need to give more information. First, what is your cost(inherited/gifted) basis in the home. This will depend on alot of factors For example; who owned the home before your mother passed, was it joint w/ your father. When you set up the life estate, was that only for your mother or for your mother and father. Did your father inherit the home from your mother and then a new life estate was set up for him.


Taxes are not always yes and no answers, most times then not the answer is it depends. Thats why there are as many code sections as there are. Your best bet is taking this to an CPA/EA or an attorney. A financial advisor might not know complex tax situations.

For now my answer to the question will they have to pay tax on the $120,000 is, maybe, it depends.

BeatleFred (talk|edits) said:

24 January 2007
My father and mother owned the home. The life estate was made for both of my parents, but my mother passed away

only two months after it was created.

My brothers are already taking less money by accepting a buyout at a reduced price, being that I cant afford to pay them each a 1/3 of current market value. For them to then have to get even less than that by having to pay taxes on it, well..., I cant blame them for being unhappy if thats what the outcome is.

Kevinh5 (talk|edits) said:

24 January 2007
By the way, Fred, if your father has a life estate, then the nursing home can get the house.

TaxManager (talk|edits) said:

24 January 2007
Fred,

Without knowing your cost basis there is no way to say if they will pay taxes on the $120,000

Kevinh5 (talk|edits) said:

24 January 2007
You are buying their remainder interest, since your father still has a present interest and can sell the entire house whenever he wants. You could possibly get zero if this happened, even if you paid for your brother's share of their remainder interest. This is not a job for a financial advisor, but for a licensed professional - EA or CPA for the tax end, and an attorney for the legal end.

BeatleFred (talk|edits) said:

24 January 2007
1) I wasnt aware that in my father's life estate arrangement, the nursing home could take the house.

At this time: my father (who lives in Europe), myself (who lives in this house), my two brothers (one lives in Long Island, NY, and the other in Florida), are all equal owners of the house. Since its not just my father who owns the house anymore, I would think it would be alot more complicated for a nursing home to take the house from ALL of us.

Well, a nursing home here is not that much of a concern anymore. My father is in Europe and its unlikely that he will move back here, as he seems to be quite happy living where he is(he is staying with a relative who looks after him).

Obviously, if he wants to come back, he can, I certainly dont object, he's my father after all. And the life estate makes it legal that he always can - which leads me to point # 2:

2) It is my understanding that if I do the buyout with my brothers in order for me to become the sole owner of the house, my father would then have to give up his life estate. This isnt an issue, because my father understands my financial situation, and wants me to resolve the problem with my brothers, so he has no objections to giving up the life estate. In reply to Kevinh5's message: my father is not looking to sell this house, its strictly a buyout situation between me & brothers.

3) In reply to TaxManager: I am not familiar with the term 'cost basis' and how it applies here. I was merely hoping that someone could provide a clear answer based on all the information I already provided.

I'll try one more time:

a) Parents buy house in NY in 1970 for $25K b) Parents write a Will in 1973. c) Parents pay off the house mortage in 1995, balance owed is now zero. d) Parents update the Will in 2004 and a life estate is created, all 3 sons

  now own an equal share of the house.

e) Mother passes away in 2005. Fred lives in house with father (who is retired), and continues

  to pay father a certain amount of money every month to contribute toward the bills.

f) Father moves to Europe in 2006, has dual US/Czech republic citizinship. g) Fred (me, age 43) who has always lived in this house, and now lives in the

  house by himself and pays all the bills on it, wants to do a buyout with his two older brothers, so that
  the house will legally be owned by only him.

h) 2007: Fred has discussions with his brothers about what price to pay each of them

        in a buyout. Brothers want 1/3 of current market value. House hasnt been appraised  
        yet, but a good assumption would be house has a resale value of $510K, meaning
        each bro wants $170K, and I would then need to take out a loan for $340K.

i)Fred informs brothers that his salary isnt enough to handle paying back a $340K loan

 every month to a lender. Fred analyzes his income and all of his expenses and determines
 the maximum amount he can take out a loan for is $240K, thus, each brother would get $120K.

j)While waiting for brothers to decide if $120K ea is acceptable, Fred goes to finacial advisor

 to get his opinion on what the best option is: is is best to do a buyout now?, or wait until
 after my father were to pass away and try and save more money in the meantime (the house

needs remodeling work done), or is it best to resell the house, take my 1/3rd share, and find another place to live? I dont know what taxes have to be paid if the house were to be resold, but Fred decides that he would like to continue living in the same house. k) Brothers accept $120K ea. They state that the house should be appraised now which

  Fred agrees to. Brothers state that if a buyout is done, it must be put in legal writing
  that if Fred were to ever resell house in future, he must pay back each brother
  (appraised value/3)- $120K. Thus, if house gets current appraisal of $510K,
  Fred would have to pay them back $50K that he owes them when house is ever resold
  ($170K- $120K = $50K ea).

l) Finally: The remaining problem that stands in the way of doing the buyout:

  Do the brothers have to pay tax on the $120K they receive, Yes, or No?
  If yes, can the income be declared in such a way that the tax can be
  eliminated, or atleast minimized?  The whole point is thay my brothers feel
  they are making a concession by taking about $50,000 less ea, that they   
  feel entitled to, but I cant afford to pay them, and I dont want to sell
  the house and move. They accepted my offer anyway. Now, it seems that 
  they wil get even less money because the good ol IRS has to stick out their
  hand out and take it for themselves. And I certainly couldnt blame my brothers
  for then being upset if that were the case. Thats why I wanted to know what the 
  answer was. If they do get taxed, they probably wont accept the buyout, which
  means its back to square 1 again....

m) I didnt hear back from oen brother yet, but the other in Fla said

  he would consult with a professional accountant to see what if he
  will incur any tax liability. So, I hope to find out the answer soon.

n) Last but not least: in case anyone here might have a similar situation

  going on within their family, I can report back here when I find the 
  answer: and I'll be glad to say what it is without implying
  that I have to get paid for it :)

CATAXES (talk|edits) said:

25 January 2007
When the three brothers got the home in 2004 it was a gift (no one had died yet) so the basis in the home is the $25,000 that the parents paid plus the cost of any significant improvements they may have made. Let's assume none were made. Each of you owns 1/3 of the home with a basis of $8,333. If you paid for improvements after that date add the cost to your basis. Again, let's assume noe were made. If either of your brothers sells his share of the home to you for $120K they will have a capital gain of $111,666. Taxable. Your basis in the home will then be $240,000 paid to your brothers plus the $8,333.

Glmpllc (talk|edits) said:

25 January 2007
lol...Fred, I misunderstood...my fault...It's taxable to your brothers.

Good Luck.

TaxManager (talk|edits) said:

25 January 2007
CATaxes,

I agree but somewhat disagree. The 3 kids don't necessarilly have a basis of 1/3 each. The life expectancy tables still give cost basis to each of the parents for their life estate interest.


Now when the mother passes away 1/2 the house is back in her estate and the remainder will get a step up in basis at that time.

So lets say the value is $400,000 at the time of mom's death, isn't 1/2 of that diveded among the remaining 4. So for simplicity's sake each of them will get a $50,000 addition to their cost basis.

So lets say that the cost basis from the gift for each for the kids is 5,000 it would now be $55,000 after mom's passing.

Gain would be 65,000 for the 2 other children. Dad still has a life estate interest unless he gifts that to Fred.

If Dad retains the life estate untill he dies then the entire house is back in the estate and the children will get a full step up in basis and then can be bought out with out a tax effect

BeatleFred (talk|edits) said:

25 January 2007
Thanks for the reply. Your response is more along the lines of what I wanted to find out. To the best of my knowledge,

my parents did not make what I would consider to be significant improvements to the house over the years other than ordinary maintenance and so forth. I want to do extensive remodeling, but if I do the buyout with my brothers, I wont have much money leftover to afford it. Its possible I might get married in the future and there will be a 2nd income, we'll see.

As long as my father is alive, there is no obligation to have to do the buyout now. I can just keep on going as I have been, but I was thinking it might be best to just resolve it all now. I am also concerned that if I wait, Interest rates will go up and it will only cost more to borrow money in the future.

Reselling the house is an option at this time, assuming my father then gives up the life estate, but my 1/3 share will still make it difficult for me to find a place to live thats comparable to where I am now. I'm not keen on giving up this house to live in a tiny condo, or find a house out in the boondocks of of Upstate, NY and spend 3 hours commuting back & forth to work every day. ** But I am interested to know: is it less complicated and less expensive Taxes to resell the house and split into 3rds now or after my father passes,..., compared to the tax situation if I do the buyout ??

If it turns out my brothers do have to be taxed on their buyout income, I really hope there is a way an accountant can declare the income so that it can be disregarded by the IRS. I cant afford to borrow more monet to pay my brothers more to compensate for their tax loss.

I should probably talk to the lawyer who updated my parents Will in '04. Perhaps he mightve made changes whereby the reference point of the house for capital gains isnt 1970, but 2004, in which case, the whole tax issue and how much is to be taxed and paid is different.  ??

PS: I studied Electrical Engineering when I went to college, and I thought THAT was a demanding major. But I'm seeing now that figuring out all the legalities and tax issues which were brought up in this discussion is a real brain-twister! :) I'm very curious as to what the outcome will be in terms of the correct answer to figure what, if any, taxes have to be paid...

Dennis (talk|edits) said:

25 January 2007
While Medicaid (County Social Services)has the right to attach a life estate (not the nursing home) this is not something I have ever seen happen. If the house was purchased exclusively from father's funds there is no step up on mother's death (Gallenstein). Father can terminate life estate to avoid apportionment. In any case, basis and gain remain the same. All that changes is who gets what. As structured, the current deal is an installment sale. If father dies as life tenant the house is includable in his estate(grantor retined interest) and there is a step-up to market value.

BeatleFred (talk|edits) said:

25 January 2007
One brother's email response (I believe the $414K comes from the property tax bill):

I think that the tax basis, as declared to the IRS after the initial arrangement was done in 2005, was $414k. So I think capital gains would apply for sales involving more than 414k/3 = $138k for each of us individually. I am not 100% certain though.

Kevinh5 (talk|edits) said:

27 January 2007
Beatle, you are not equal owners in the house if you only own the remainder interest. You have nothing until your dad dies except a promise that may come up empty. The same for your brothers.

also the county tax appraisal value has nothing to do with basis. That is why you need a professional to help you with this. your brothers are not tax professionals, are they?

BeatleFred (talk|edits) said:

27 January 2007
Kevin, (other readers):

I AM seeing a professional who has been advising me. When I asked him if there were any taxes that had to be paid if I gave my brothers the money to do the house buyout, he told me that my brothers need to speak to an accountant to get the answer. I was hoping my own advisor would tell me the answer, but he said its better to have my 2 brothers get their own answer, otherwise for him to advise 3 people would lead to a conflict of interest. So, I hope to hear from my brothers soon. My brothers do their own taxes, but are not tax professionals (to answer your question). I was simply hoping that if I explained the situation in this forum, that SOMEONE might know the correct answer on the taxes, sigh....

In my previous message, what I meant to say was that one of my brothers had filed a Form 709 gift tax return for the 2004 tax year (the year that my parents had their Will updated, and the life estate was created).

Now Kevin: WHERE in anything that I wrote, did I state that I am the only with a remainder interest?? I thought it was already explained several times that me and my 2 brothers are all equal owners of the house, so that means each of us has a 1/3 remainder interest. Our 3 names are all on the deed, as well as my father, who by virtue of the life estate, can always come back to live here if he wants to.

My father is still alive, so this situation is not an inheritance issue, thus the Taxes I'm asking about, has to do with a GIFT tax, not an inheritance tax. My father is gifting the house to his 3 sons. If he didnt do this, and he died, then we would inherit it and probably have to pay more taxes, which is what we want to avoid.

In order to do a buyout now, which means that I want to become the sole owner of the house, with only my name on the deed, it is my understanding that my father would have to give up his life estate, which as I stated in a previous message, he is agreeable to doing. The question is: if I give my brothers $120,000 each, DO THEY HAVE TO PAY TAXES on that money ????

I am not sure if the lawyer did anything in the writing of the '04 Will such that the reference point on the house for any future capital gains taxes is no longer the 1970 $25,000 price, but its actually the 2004 market value. I believe if he was able to do this he did, and it seems that it is what my brother implied when he filed the '04 gift return - he had to put a value on that form, and he used the value that is shown on the city's assessment on the propert tax bill, which was $414,000.

My brother then didvided the $414K by 3 (brothers), which comes out to $138K. My brother seems to think that since the buyout money I am giving to him and my other brother is $120,000, which is LESS than $138K, then my brothers dont have to pay taxes. SO, IS THIS CORRECT or NOT CORRECT, someone, ANYONE know?? If I stay in the house for the rest of my life, it can be left as is, but the capital gains would reappear again if I were to resell the house in the future on the money that I get from the sale of the house, and the money that I owe my brothers.

Kevinh5 (talk|edits) said:

27 January 2007
1) You don't state that your advisor is a tax pro, just a financial advisor. Sorry, there is a difference.


2) You need to do more research on retained life interests if you think you don't own a remainder interest.


3) If dad died everyone would owe LESS tax, not more.


4) What else do you want me to point out?

Dennis (talk|edits) said:

27 January 2007
Beatle: Under current law, the estate of a US citizen will have no tax liability if the gross value of all assets is less than $2,000,000. New York will impose a tax on assets sited if gross estate exceeds $1,000,000. You have thus far posted nothing to suggest that there will be an estate tax liability when your father dies. (And if there is, there are far better ways to accomplish your goals.)

Kevinh5 (talk|edits) said:

27 January 2007
To answer your question, if dad deeded over his life interest now to the 3 of you, then YES your brothers would pay taxes on the difference between the sales price and their basis. YOU may have to file a 709 if you only pay them 120K for something worth $165k. Others have given you the same answer above.

The gift return showing Fair Market Value at $414k does not establish basis as $414k.

Glmpllc (talk|edits) said:

27 January 2007
lol...starting to feel like Candid Camera.

Kevinh5 (talk|edits) said:

27 January 2007
GL, I will ditto your earlier post.


Fred, the answer is YES. Good luck.

Blrgcpa (talk|edits) said:

28 January 2007
If 3 other people own the house, why are you only willing to pay 2 of them? If this is your father's life estate, who are you to decide to buy it at below FMV?

Blrgcpa (talk|edits) said:

28 January 2007
If this is your father's life estate, what right do you have to sell it from under him? I'd talk to an attorney about the details.

As for taxes, FL has no personal income tax. NY on the other hand certainly does.

BeatleFred (talk|edits) said:

28 January 2007
Re: "what right I have to sell it from under him":

My father is an 87 yr old man who lives in the Czech republic with a relative. At this stage of his life, he is not looking to to get any money whatsoever from the house. If that was what he wanted, he could have sold the house before the life estate was created in '04. Back in '04 when the life estate was created, my mother was was sick with cancer. At that time, a friend had told me about elderly people in nursing homes, and something about a 3 year rule that if a house was transferred out of parents' name to their children, then the nursing home would not be able to take the house, if parents ever were in nursing home. Thus, it is my understanding that one reason why my parents created the life estate in '04 was to protect the house in the event they ever had to go into a nursing home, 3 years+ after the estate was created. Since my mother died, and my father moved back to Europe, the whole issue of a nursing home is no longer relevant. The main concern right now is the Buyout and Taxes.

My father does not want any money from the buyout. He is content to pass the house to me. If that means he has to sign papers to surrender his life estate rite, he has no objections. If he wants to ever come back here, he can, I'm his son, I'm not going to refuse him. Thus the buyout really is about me and my 2 older brothers, and its just them I would be paying money to. When this whole subject first came up, they were unhappy about my viewpoint that I wanted to buy the house from them whereby they would each receive less than 1/3 of current market value. But I simply dont earn enough money at my job to afford taking out a standard 30 yr fixed rate loan to pay them the full share ( I believe I already explained this in previous messages). Recently, after some discussions, my brothers decided to accept my offer of $120,000 to each. The house hasnt been appraised yet, but a good estimate would be about $510K. If thats the amount, then each brother is getting about $50,000 less than their share. I am not on this forum to debate the issue of whats fair to pay my brothers, at this point, the price is agreed upon, the question is about TAXES on that money.

I was hoping someone's answer would enlighten me, and could explain it without the technical jargon. The house was bought in 1970 for $25,000. The house's value according to the assessment on the '04 property tax bill was $414,000. Life estate was created in '04. 709 gift tax from was established on my parents' '04 tax return. I want to do a buyout with my brothers now in '07. I understand that each brother might be in a different tax bracket because I dont know exactly what their salaries, and I dont know if it makes a difference if one brother lives in Florida, but the house in the buyout I'm getting is here in New York. I just want to know if they must pay taxes on that buyout money. How many times do I have to say it??!

The whole point is my brothers are making a concession to take less money for the house so that I can continue to live here, as opposed to having the sell the house at some point and finding somewhere else to live. Here in NY, prices of houses are insane, as well as renting an apt. I feel my best option is to stay where I already here. Just moving to say..., Long Island, would be impossible- the propert tax itself on L.I. is double, triple, what they are in Queens, NY. My brothers would not be happy to then be left with even less money by having to pay taxes. They might not want to do the buyout. Thus, my concern about it, and wanting to know if they had to pay or not.

The buyout price is $120,000 to each. I imagine the other piece of information in determining the answer, is the value of the house. I thought it was established as $414K, but apparently some people who responded here, think it is incorrect. If thats so, please tell me (in simple language) why its incorrect, and what the correct answer is, Thank You.

TaxManager (talk|edits) said:

28 January 2007
Fred,

Your basis is not $414,000 because when you receive a gift your basis in that gift is the same as the persons who gifted it to you. It is not the same as inherited property. So the basis of $25,000 was divided amongst 5 people at the time of the original gift. The portion of the basis attributed to your parents should have been based on their life expectancy. The remaining should have been divided equally amongst you and your 2 brothers.

Now when your mother passed away, the property went back in her estate. At that point 1/2 the property would get a step up in basis for the FMV at that time. So if FMV of the property was $400,000 then the property would get an increase of $200,000 That would be divided you ngst the 4 of you. So you now have at least a cost basis of $50,000 plus the basis you received at the original gift.

So if you sell now then your brothers have a gain. And will pay taxes on it.

If your father maintains a life estate untill he dies then the entire house is back in the estate and the property will have another step up in basis. That will now be the new basis for you and your brothers. No taxes will need to be paid then.

Dennis (talk|edits) said:

28 January 2007
If father terminates life estate, basis will be divided by three, not four.

BeatleFred (talk|edits) said:

28 January 2007
T.M.: Thanks for the reply. I suppose I will have to check back with my brother who had filed the gift return on behalf of my parents. My mother passed

away on 1/1/05, so I believe that he still had to file a tax return for that year, being he is the executor.

I still dont quite understand all the jargon, the more I try and analyze it, the more of a "brain-twister" it feels like.

Apparently, from what you are telling me, if the buyout is done now, which means my father has to give up his life estate, then my brother will have to pay taxes. But if we dont do it now, and postpone it until the future, after my father passes, then my brothers dont have to pay any taxes on the buyout money I give them. Is that correct? (I was hoping to get the whole situation resolved now and do the buyout. I'm concerned that Interest rates will go up in the future and it will be even more expensive for me to borrow money on a loan to do the buyout. Even now, it will put me on a tight budget, if the rates go up higher, 7, 8 9%..., I dont know if I can afford it...)


I just dont understand from the IRS point of view, what difference does it make to do the buyout now, vs later after my father passes, why do taxes have to be paid now, but not later ?????????????

TaxManager (talk|edits) said:

29 January 2007
The reason why it is better to keep the house w/ the life estate untill your father passes is because you didn't get a completed gift. You can't sell the house w/o your fathers ok. because he still has a right to live in the house. If you tried to sell the house to a 3rd party (not your brothers) the new buyer would have to let your father live there untill he passes (they don't want to do that. When he passes it goes back into his estate then he gets to give it to his heirs at fmv at the time of his death.

If you get money now your brothers don't get the step up in basis. You are better off talking to a professional (ie cpa, EA, attorney) who can lay everything out for your. Your question is not a black and white answer. It is a complex situation.

I wish you luck, but you situation isn't one for a tax forum but for a one on one with a professional.

BeatleFred (talk|edits) said:

31 January 2007
Well, as I have stated many times already, my father has no objections to the buyout that I want to do with my brothers, so getting his approval is not the problem here. It was a matter of whether any taxes had to be paid by my brothers on the buyout money they receive, and whether there was a difference in the amount of taxes to be paid if the buyout was done instead after my father passed.

I think I have gone out of my way to explain things as clearly as possible, but getting an answer feels like an exercise in futility here, so I give up. I will call an accountant and find out on my own what the story is. Thanks anyway.

Glmpllc (talk|edits) said:

31 January 2007
Fred,

You did a heck of a job explaining it. Some of us even answered it. Unfortunately, none of us could give you the answer you wanted.

I wish you the best of luck and remember to refer your friends.

TaxManager (talk|edits) said:

31 January 2007
Fred,

I don't know why you don't see that I have given you the answer. My statement above "The reason why it is better to keep the house w/ the life estate untill your father passes is because you didn't get a completed gift. You can't sell the house w/o your fathers ok." Is not in regards to whether or not your father will give his ok it is that he HAS to give the ok in order for you to be able to sell. Because of that issue it is better to keep the house w/ a life estate attached. That way there will be a full step up in basis when he passes.

In all of my responses above I have told you what would happen if you buy out your brothers. I wish you luck with your call to the accountant. I hope it helps you.

Kevinh5 (talk|edits) said:

31 January 2007
I gave you the correct answer too. You just didn't like it.

BeatleFred (talk|edits) said:

2 February 2007
How can it be said that I dont like the answer when I dont have a clear idea of what the answer is?

Ok, fine, if my father HAS to give his permission, he said he would do it, so that isnt a problem. But I need for you to clarify your answer, and explain it in SIMPLE language -> what do you mean by a 'full step-up in basis'? What IS the actual dollar amount of the basis that is to be used as a reference point in this buyout situation? Is it a small or big difference in taxes that my brothers have to supposedly pay if the buyout is done now, compared to doing after my father passes?

I actually tried calling the IRS itself earlier today to see if anyone there has a clue. After a few rounds of phone tag with switchboard opeartors, I finally spoke with a representative who gave an explanation that sounded something like a plausible answer. He said that if the buyout is being done such that my brothers are getting money from me at a price thats less than the current fair market value of the house, for example, if FMV is $510K, which means each brothers share is $170K (which is simply $510K / 3 brothers), but I am giving each brother only $120K, then each brother is getting $50K less. So, from that $50K, IRS allows $12K to be excluded, thus each brother is liable for tax on the remaining $38K. Does anyone here agree with this?, or is this the supposed answer that someone here already told me, yet I somehow overlooked?

I also spoke with a mortgage loan company, and they told me I could do a refinance and arrange it so that I pay my brothers, but their names are removed from the quitclaim deed at a time shortly after the closing, which apparently would mean they wouldnt have to pay taxes. True or not, I cant say.

I called an accountant and made an appt to see him, which hopefully will finally yield what the answers are. Up until now, I still dont see a clear or accurate answer that anyone has given me. I am also doing a Google search on 'Gift of Equity' to see what comes up. The IRS rep I spoke with on the phone said my brothers were giving me a gift of equity, thus, they would probably need to fill out a 709 Gift tax form (on the $50K-$12K I described above).

Glmpllc (talk|edits) said:

2 February 2007
Good luck during your appointment with your accountant.

Kevinh5 (talk|edits) said:

2 February 2007
I would recommend you print out this discussion thread to take with you, as you have done a great job of explaining your situation, and it will provide clues as to the issues that need to be addressed by the accountant in your meeting. The IRS phone call didn't address income taxes, and the information they gave you about gift taxes, as you have presented it here, is not correct either.

Tdoyle (talk|edits) said:

February 2, 2007
For those of you who don't know about this feature, click on the Printable version link in the toolbox in the left-hand column. This will display this page without all of the headings and left column material. Then use your browser to print a copy.


- Tim Doyle, TaxAlmanac Moderator - Talk to me 11:53, 2 February 2007 (CST)

BeatleFred (talk|edits) said:

3 February 2007
I met with an accountant earlier today (charge: $100). We went thru the numbers

and it turns out, according to what he said, my brothers would have to pay taxes if the buyout were done now.

From some folks who responded here stating they already gave me the answer: perhaps you might want to say what it is again?, or copy & paste it here, because I dont see any answer that matches what the accountant told me.

The numbers are: $25,500 for house my parents bought in '70. It was estimated on an '04 gift return 709 form that my parents made improvements of $50K to the house. On the same gift form, my brother used $414K as the FMV value of the house at that time that my mother passed. One brother lives in Florida so he has no state income tax, so it appears that his tax rate would be 15% federal. Other brother in Long Island would have what I believe is 6.5% and 15% NY state and federal.

Alrighty,so..., from all these numbers, would anyone like to answer what the basis is for father, deceased mother, and 3 brothers?, and if the buyout price that I would give each brother is $120K, what amount in tax would each brother have to pay on the difference between $120K, and the basis of all 3 brothers?

I believe all the information is provided in order to arrive at the numberx, nothing of which amounts to more than grammar schoool level mathematics. I'd like to verify the accountant's answer with what anyone else here claimed as being the correct answer.

Rgtaxservice (talk|edits) said:

4 February 2007
For that $100, you should have chosen an accountant capable of providing you with more than grammar school level mathematics answers. What did your acountant tell you about the life estate?


Taxes aren't about math, they are about tax law and regulations.

Glmpllc (talk|edits) said:

4 February 2007
Fred, if you boiled it down to grammar school math and you can't figure it out, then maybe one of your kids can help. If you don't have any kids, maybe a neighbor kid will help.


Good luck.

TaxManager (talk|edits) said:

4 February 2007
I would visit another accountant(or question this one) as he failed to bring up the fact that since your mother retained a life estate in the home there would be a step up in basis upon her death (which means that the cost basis of the home to you and your brothers is no longer the $25,000 plus the $50,000 of improvements rather half of the home's new cost basis is the fair market value at the time of her death)He also failed to bring up that your father's life estate has a value to it and therefore the basis was not divided amongst the 3 of you at the time the life estate was created. SEE MY ANSWERS ABOVE!!!!

However, if you are satisfied that your brothers will need to pay a tax on the $120,000 payout less their cost basis, go for it. I wouldn't be paying tax on that amount.

BeatleFred (talk|edits) said:

4 February 2007
These are the facts of what was discussed at the accountant's office:

a) Parents bought house in 1970, exact price of house is $25,500. b) Parents made last payment on the mortgage loan in 1995. House paid in full. c) Life estate and quit-claim deed was legally made by lawyer in 2004. d) Mother passes away in 2005. e) Brother files Form 709 gift return for '04 tax year on which he lists the house's value as $414K.

  and he also lists the cost of home improvements over the years as $50K.

From what was written above, I told the accountant that I want to do a buyout now with my 2 brothers whereby I give each of them $120K so that I will be the only legal owner of the house. House has not been officially appraised, but its current vlaue is estimated to be $510K. I cant afford to do a buyout at the fair market value, thus my best offer to brothers is $120K ea, which they accept. The question is: do they have to pay taxes on that money, and how much?

The following info below is what I got from the accountant:

Father's basis: 1/2 (orig cost + home improvement) = $37,500

Mother's basis: deceased, thus step-up = FMV at time of her death/2 = $414K/2 = $207K

Father + Mother basis = $244,750

Basis for each brother (there are 3 brothers) = $244,750/3 = $81,583.33

    • So, it appears that $81, 583.33 is the "magic number" here. Going back to what I wrote earlier,

I want to pay each brother $120K ea in the buyout. Well, it looks like my brothers have to pay taxes on the difference between $120K and the basis of $81, 583.33, which results in each of them paying taxes on $38,416.67

One brother lives in Florida, no state income tax, thus accountant said his tax would be 15% federal which comes out to: $5,762.50

Other brother lives in Long Island, NY, so his taxes, state & federal are 6.5% & 15%, for a combined total of 22.5%, which comes out to: $8,643.75

So, that seems to be the answer. Now, WHERE did any of you guys already tell me that in your messages as you claimed? I busted my ass typing the whole story neumerous times in easy-to-understand language, yet I either get sarcastic replies, or complicated, unclear tax jargon comments.

If there might be 1 person here who could find it in themselves to be so kind, please answer my remaininn questions:

1) Is the above information that the accountant told me correct, or is there a way around it so that my brothers really dont have to pay taxes? (all the accountant said was that in order to reduce taxes, we could list a higher amount for the estimated cost of home improvments made over the years. However, when I plugged in a number of $90K, instead of $50K, the tax reduction result was not too much lower).

2) The idea that I came up with later on after I left the acct's office to avoid my brother's paying taxes is: Do the buyout now and give each brother $80K, which is LESS than the basis of $81, 583.33 I would then pay each brother $12K each year for 4 years to satisfy the $120K payment for the buyout. ($12K being the max amount a person can give another person without tax consequences in a year) So, can this be done ???

3) The other idea I had is: so that my brothers dont have to wait 4 years for the rest of the money, can I give $12K to several other family members now (such as my brothers kids), and they each simply give the $12K back to my brothers?

4) Final question: if the buyout is postponed until after my father passes away,

does it mean my brothers will then NOT have to pay taxes?

I presume that if we do it after my father passes, it means that my father's basis will no longer be the original $37, 500 as shown above in this message, but it will be a new basis of the FMV at his death, correct? Lets say the house's FMV at his death will be $600K, does the basis for the 3 brothers become 600K?, or does the basis of my mother get added to my father< thus $207K+ $600K = 807K, or is 807K divided by 2, the 2 representing 1/2 of each parent, though both are deceased?

I dont think I can write it any clearer than I have. As anyone can see, there is no Calculus involved, thus my comment about grammar school math. Sorry to be so long-winded, but I knocked myself out to explain it all, I just wish now that we've come this far, that someone can PLEASE just verify that what the acct said is correct and give answers to the questions about doing the buyout later, and if the $12K ea year can bypass having my brothers pay taxes, Thank You.

Rgtaxservice (talk|edits) said:

4 February 2007
Fred,

You've written your 'problem' numerous times.


Users have written various replies explaining that your question is not as clear cut as your vast experience in tax craft would like it to be.


You've also written a check to an accountant, ask him the questions. Isn't that what he gets paid for? Apparently his is not the answer you seek.


If you what to verify his answer, write another $100 check pay another accountant to do the 'simple math'. Check writing is not Calculus.

BeatleFred (talk|edits) said:

4 February 2007
YES, I have written my problem NUMEROUS times. By now, and especially since

my previous post, there should not be any problems with things being "clear-cut" anymore, is there any more information that needs to be supplied from me that I havent already provided in as clear a manner that is humanly possible?

Yes, I went to an accountant earlier today and in fact, I paid him a check for $100 after our conversation. Why do you write in a sarcastic manner that his answer is not the one I seek? Its not me who has to pay the taxes, its my brothers. All I asked is for someone to verify that what the accountant told me is correct, and if it was correct, if taxes could be bypassed if buyout is done now for $80K, and the balance is paid $12K ea yr in tax -free installments.

I'm not rich to keep paying accountants for answers as you suggest. Your reply is useless to me and your unfriendly tone is unnecessary, so do me a favor and just dont bother reading my messages anymore, Thank You.

Whats the point of having this forum?-> why dont we all just pay money to an accountant on our own time instead of asking questions here, and God forbid someone would have some knowledge of tax laws here and doesnt have a stuck-up atttitude such that he/she could simply answer some questions without making it sound like its a huge incovenience to them.

I saw the accountant, I paid him $100- are you happy now?, I can scan the receipt as proof, if its not too much effort or a mental strain, can you verify that what he said is correct?

PS: My brother's ex-wife works an accounting office, and she said she would look into the matter. I'm interested to know if her conclusion will be the same as what the accountant that I paid $100 for, was. Bro's ex wife mentioned IRS Publication 551 'Basis of Assets' to read for more inforamtion. Well, atleast thats something useful, as opposed to your useless comments. All the math involved is not all complicated, its just a matter of whether its correct or not.

For all I care, I'll give my brothers the money, and they can just put it in the bank and leave it at that. If the IRS has a problem with it, let them contact me. If they do, I'll just tell them I tried numerous times to do the right thing and get an accurate answer, but no one seemed to know what the answer was, so I finally gave up. Throw me in jail then, and spare me the effort that it takes to provide a clear answer to a situation that I explained very clearly!

Rgtaxservice (talk|edits) said:

4 February 2007
Now that's the attitude that will have professionals lining up to help you.

Good luck.

Glmpllc (talk|edits) said:

4 February 2007
Fred, I'd be interested in knowing what you believe the point to having this forum is.

BeatleFred (talk|edits) said:

4 February 2007
The name of this forum is 'Tax Questions', so the point is-> to ask tax questions.

I explained my situation which involved taxes, and I had questions. How much more can it be broken down to than that?

Somehow, I had this "crazy" idea that some other people here might have been in a similar situation, whereby they came into this world by having parents, and that someday their parents who are guaranteed to pass away (being that noone on this planet lives forever), would have a house that would be passed onto the children either via gift or inheritance. I dont think this situation is a rare event in anyone's life, so I didnt think it would be as impossible as it seems here for someone to explain the tax laws.

I studied Electrical Engineering, my hobby is hi fi stereo equipment. I participate on various audio websites where I help people who have questions on their audio stuff. I try and answer their questions in a courteous manner, without the need to write technical language on electronics that they wouldnt understand. I also dont expect that every person with a question has to take their stereo to a shop and pay a technician to look at it.

I thought maybe things would be similar in this forum, but it looks like accountants see things differently. But even so, as I wrote before, I DID see an accountant (if anyone wants his name and phone # to verify I saw him, just let me know, I certainly dont want anyone to think I'm lying).

And being that I did see him and I wrote what his evaluation was, I simply wanted to verify with anyone here if what he said is correct. No one has to overextend themselves, I already wrote out all the numbers and simple math calculations. But despite paying the accountant, and giving all the information clearly so that there should be nothing thats not understood by now, the responses so far are ignoring the tax issues and discussing "my attitude". As if, any of you are any different in that you would willingly give money to the IRS out of your own pocket, And in my case, its my brothers who'd be paying, not me. I was just trying to get an answer to make things clearer for them.

Well..., at this point, lets just have it so that if anyone cares to verify what the accountant told me, please do so, and I'd appreciate it. If anyone wants to write about 'attitudes', dont waste your time and just dont write anything at all. If the Moderator is reading this, feel free to delete this entire thread, I really dont care at this point. If there is problem with the IRS in the future, I'll have them deal with the accountant I spoke to, because he is the one who gave me the information, so let him be held 'accountable' (pun intended).

Glmpllc (talk|edits) said:

4 February 2007
Fred, to use your analogy to an audio website, your qestion was akin to stating:

"I have a box full of parts that I think will make a stereo...will someone please tell me how to put it together."

As you must know, that would be very difficult to do, no matter how many times the questioner told you that it should be easy.

If you peruse the various discussions, you'll see that some questions are easy to answer, others very difficult or even impossible. The answers to many tax situations are very "fact specific". Tax can be very nuanced...sometimes it's like a science but at other times it's an art.

I do wish you luck.

BeatleFred (talk|edits) said:

4 February 2007
Gimplic:

Thanks for the explanation, but this discussion has been going on for a while now. At this point, having gone to see the accountant, all the facts of my situation have been presented. I wrote them here, all that needs to be done is review what I wrote about 8 messages above this one.

Do I need to provide any more details? I cant think of any other facts that need to be said to make my situation clearer. All I ask now is for someone to verify what the accountant said. Are YOU able to do that, if not, anyone??? If taxes do have to be paid, then how about bypassing it with paying what exceeds the basis in $12k per year tax-free installments?

Poorhouse Road (talk|edits) said:

4 February 2007
For what it is worth let me shed some more thought on your situation. Basically when the deed was changed in 2004 into everyone's name it created a different tax situation than just inheriting property or gifting property as the case may be. Your parents retained life time rights, so in essence they really didn't give you anything for tax purposes. When your mother died you and your brothers were still left with one life time estate with your father so you still really don't have a property you can do anything with. If you allow your father to release his life time estate to you and your brothers you then have a completed gift and his basis then becomes your basis. This is what it seems you wish to do at this time so here are the numbers you get from your father. (1/2 414,000 or 207,000)+ (25500 + 50,000/2 OR 37,500) TOTALING $244,500. $244,500/3 = $81,500 EACH. I agree with the accountant you have seen. As to paying less to your brothers 80,000 and giving them gifts of $12,000 - I think that is OK. I am rather new to this forum, but I have to defend those above who gave responses. It was only after you went to see the accountant that $50,000 in improvements was discussed. I hope this wasn't a number pulled from the air, but a list was put on paper to arrive at that number. Any agent that might review this would be suspicious of a nicely rounded number such as $50,000. I wish you well because dealing with family in such matters is taxing to say the least.

Dennis (talk|edits) said:

4 February 2007
This thread is rather instructive for those of you who deal in estate planning. The best plan may very well not work because it doesn't meet the needs of the client, in this case Beatle's need to get the deal done now regardless of disadvantage to his siblings. Note that purchase of the brothers' remainder interest given the fact pattern would probably not result in a taxable gain. Those who would consider separating the forum should also take note of the thread's longevity.

BeatleFred (talk|edits) said:

4 February 2007
P.R. Thanks for the response. The $50,000 as the cost of home improvements was an estimate that my brother came up which

he wrote on the 709 gift form in 2005 for the 2004 tax year. I am not sure if this gift form HAD to be filled out, but I believe the lawyer who wrote up the life estate and quit-claim deed had told my brother to file the form on my mother's behalf when she passed away.

$50,000 is an estimate. It would be difficult to go back 35+ years and figure out an exact number as to all the improvements that were made. As I had mentioned previously, the accountant didnt think $50K was a suspicious number considering the many years my parents lived in the house. Even so, I dont think it matters much, even if a higher number was used, say $100K as the cost of improvements, if you plug $100K into the equations, it doesnt reduce the taxes for my brothers that much.

As for what Dennis said, re: "disadvantage to siblings" - well, I already stated from the beginning that I cant afford to do a buyout with my brothers by giving them a share based on the house's value now. The house's value went up by about $300K in the span of just a few short years, but my job salary didnt go up by the same amount, so the ratio between house value and my salary increased significantly, far past what I can afford. However, I lived at home with my parents and took them to doctor's appts in their senior years, did food shopping for them, etc.. which my brothers didnt do because they moved out a long time ago, so I feel my time in the house is worth something, and it cant just be split into 1/3rds anymore between my brothers. Regardless, that is not what I am here to ask about. What price that me and my brothers agree on to do the buyout is our own decision to make.

All I wanted to know was what TAXES if any they would have to pay. And if the buyout is done AFTER my father passes, do they then NOT have to pay taxes? I have asked this countless times already. I DID see an accountant, and I took the time to come back here and freely SHARE the information, my own personal information, with the other readers here. All I asked was a 2nd opinion to verify what the acc't said. Is that unreasonable? What more can I already write about the situation? If anyone happens to be an accountant here, I think it should be straighforward to read my previous message showing the history of the house and the numbers, and simply say either Yes, or No, on the acct's answer. If its Yes, those are the taxes to be paid now, then what about the $12K installments as I suggested?

In the meantime, I printed out a PDF file of IRS Publication 551, Basis of Assets, which I will read to try and learn whatever I can learn on the subject. From a glance at it, looks like it has useful info, so being that no one mentioned this publication in the discussion, I figure I would in case it might be of benefit to anyone else.

Rgtaxservice (talk|edits) said:

4 February 2007
Yes. Yes. Yes. No.

Kevinh5 (talk|edits) said:

4 February 2007
Technically, the basis number above has to be apportioned between the life interest and the three remainder interests. If dad dies before the sale, then the 3 get stepped up basis and no tax (Beatle - is this what you want? If so, there is your tax plan - wait for dad to die.) If dad doesn't die, but signs his life estate interest over to his 3 sons now, then those numbers sound reasonable. Beatle, if the brothers sell you their 1/3 of the remainder interest for less than it is worth then THEY might need to file the gift tax return showing the gift to you.


Congratulations on getting some professional advice and doing some homework. By now you understand that your question is not so simple, don't you?

BeatleFred (talk|edits) said:

4 February 2007
Which question does the 'No' refer to? Does your 'No' mean that I cant pay

my brothers $80K ea (which is less than their basis of $81,583.33) tax-free and then pay them the $12K each year for 4 years until the get they get the full $120K? If so, why cant I do this? I thought you can give $12K/yr to someone tax free?

Yes, Kevin that is what I wanted to know. But let me clarify: My father is 87, and I hope he lives to atleast 100 and stays in good health, I dont wish to make it sound like I'm in a hurry to get rid of him. When I first wrote about my situation here, I had no idea of what 'basis' was, but now that I saw the accountant, I have a better idea of what basis is, and how to determine what the $ amount is for each person in my family. I also now know that there is a step-up in basis when a parent dies. Apparently, from what I see now, the current basis for me and my 2 brothers is $81,583.33, but that number will become much higher when my father passes. High enough that I presume it was far exceed the $120K I would give to each of my brothers in the buyout, so that they dont have to pay taxes, correct?

Well, hopefully, we can get to the finish-line here: Instead of waiting for my father to pass, I propose to do the buyout NOW, pay each brother near the max of their basis ($80K), and then bypass taxes they pay, via the $12K each year. If it were to take 10 or 20 years to oay them the balance, they probably would not go for it, but $12K, $12K, $12K, $4K only takes 4 years, so its reasonable.

Or, as I asked and no-one answered: can I pay my brothers in full by giving the $12K to more people in the family now, and they simply return it to my brothers, or is this an IRS no-no?

Kevinh5 (talk|edits) said:

4 February 2007
The IRS would see that as a 'disguised sale'. Substance over form.

BeatleFred (talk|edits) said:

4 February 2007
Disguised sale? Well perhaps, but technically it isnt illegal is it?

There are many tax books for sale at bookstores which explain many methods of bypassing taxes. I am sure many people try and take advantage of whatever loopholes they can. Is there anyone here who wouldnt, or can someone actually tell me that they want to give their money to the IRS?

Doing the buyout for $80K each is not illegal. And according to tax laws, giving someone $12K per year tax-free is perfectly legal. Put the two together, whats the problem? Is the IRS going to check after the buyout for the next 4 years if my brothers are depositing $12K in their bank account and throw me (or them) in jai?

Kevinh5 (talk|edits) said:

4 February 2007
It is only illegal if your brothers report it the way you are suggesting. That is tax fraud. The IRS would probably just want to assess tax, penalties and interest. They want your brothers out there working and paying taxes, not locked up.

The main reason we have jobs as tax professionals is because people try to do stupid things and we were called to this profession to stop them from their selves.

BeatleFred (talk|edits) said:

4 February 2007
Well, my oldest brother will soon be 60, so he is thinking of retiring in two years.

He feels he is making a concession to me by accepting only $120K, when he could be entitled to as much as $170 or $180K. Even so, he is still ok with $120K, but the whole point of this discussion is that he would be unhappy to be left with even less than $120K by having to give a portion of that money away in taxes. I dont think there is a single person on this planet who enjoys giving money to the IRS, except maybe those who work for the IRS.

My intention is not to commit IRS fraud. My intention is to find a legal way to avoid paying taxes, or rather avoid putting my brothers in a situaiton of paying taxes unncessarily. I am nowhere near rich enough to donate money to the IRS. The 30 yr mortgage loan on the $240K I would be taking out if the buyout is done will put me on an very tight budget, so every dollar that can be saved, counts.

Even rich people will avoid paying taxes if they can. The Rolling Stones left England in 1971 to move to France so they could avoid paying taxes to their country. No one thre them in jail for it.

I also dont see where the IRS comes up with $12K per year. As if, what.... someone gives another person $13K, or $12K+ 1 penny, thats its the end of the world?

I will call the accountant tomorrow when his office reopens and ask about the $12K installments.

Dennis (talk|edits) said:

4 February 2007
As the actuarial value of the existing life estate is around 123K and fractional remainder interests would be entitled to discount, fraud is not a concern in structuring a transaction between family members.

BeatleFred (talk|edits) said:

4 February 2007
Ok Dennis, I dont know about terms like "acturial value" and how you arrive at $123K, the buyout is for $120K. Where does the

extra $3K come from? And you mention 'discounts', but I dont know what that is. But it seems like you're saying the $12K installments can be done.

As I said before, me and my brothers can do a buyout for whatever price we want to. There is no law against that, if we want to make it $80k to each brother and I take out a loan for $240K, and then hold the extra $80K in the bank and give $12K each yr to my brothers, and $4K in the fourth year, then I dont see anything at all illegal about it. The IRS should be able to survive without the approx $14K that my brothers will keep for themselves. One brother could use the money to fix hurricane damage to his house in Florida. Thats going to a better cause than having our government send young soldiers to die needlessly in Iraq with our tax money.

Kevinh5 (talk|edits) said:

4 February 2007
Dennis, are you blessing the structure of several $12,000 gifts until the amount given equals the agreed price? I'm sorry, but Beatle doesn't sound like he is financially able to give these "gifts" independent of the buyout. It is clearly a disguised sale. Maybe instead Fred should buy dad's life interest for some sum, have dad take the §121 exclusion, then let dad give money to the other sons as he sees fit. THEN I would agree that their sale of a remainder interest would qualify for a nice discount.

Blrgcpa (talk|edits) said:

4 February 2007
You have a related party transaction. Your brothers can't take a loss if you pay them less than the basis. As I previously said, and I'm a NY CPA in the NY metro area, your both brothers will pay federal tax on the sale. There is no income tax in FL, but there is in NYS.

Your father still has the right to the house and it should not be sold from under him.

Upon his death, the basis of the house will = FMV. There will be no gain or loss if it is sold at that time.

Dennis (talk|edits) said:

4 February 2007
I'm not blessing anything, Kevin, only pointing out that fair market value of the individual remainder interests is less than basis. Disguised sale would have no meaning.

BeatleFred (talk|edits) said:

4 February 2007
Yes, youre right Kevin, bringing up the war wasnt necessary. It was not intended as a knock against

any soldiers, it was directed more at Bush and his insistence on spending money in that way. Lets just drop that subject entirely. Is there anything else that needs to be said, or has everything been covered here and we can conclude the discussion?

Kevinh5 (talk|edits) said:

4 February 2007
We are all clear on the tax ramifications. You now have a good idea why we didn't just want to give you a "yes" or "no", because your situation is extremely complicated. Good luck on your house purchase.

BeatleFred (talk|edits) said:

4 February 2007
Birgcpa: I didnt see your message until after I posted mine above. This thread has been going on a while,

so perhaps its hard to keep track of all the details, but I already mentioned that my father has no objection to giving up his life estate. In fact, I just spoke with him on the phone earlier. He is living in Europe, but he is thinking of coming back to NY for a visit. I'm his son, there isnt a problem where he is worried that if he gives up his life estate that I would forbid him from coming back home. Thus your comments that the house shouldnt be sold from under him isnt a concern to us.

Now Kevin is talking about buying out my father's life estate (which I didnt know until now was even possible) and mentioning a "121 exclusion"- here we go again with tax jargon, (I'll have to Google search for more info on it), or cal the accountant tomorrow and ask him to explain that, hopefully he wont object and tell me I have to come back to his office again and pay more money. I was willing to stay longer yesterday and pay for his extra time, but he was the one he seemed to feel he explained it all.

Poorhouse Road (talk|edits) said:

4 February 2007
If you pay your brothers 80K after your father has released his interest, the 1099S (if one is filed) with the IRS will state that 80K to each of your brothers. The rest of your arrangement would simply be between you and your brothers. Nevertheless, your basis could only be shown as your 81+K + 160K. As the law now reads if you are single you can only make $250K profit on your home or $500K if you are married. I think you should consider your eventual tax consequences should you ever decide to sell. You must realize the Tax Code is here to control the way transactions are conducted between individuals and entities, but when it comes to family there are always other ways to do things if all parties agree. I don't think in this situation you are evading income taxes, but simply avoiding income taxes. In my 35 tax seasons I have seen much worse regarding money transactions between family members.

BeatleFred (talk|edits) said:

4 February 2007
Thanks PR, I will keep the 1099S form in mind if the buyout goes thru. I emailed my brothers yesterday, I'm waiting to hear back from

them, especially on what they think of the $12K installments to avoid the tax. My brother also plans to talk with his ex-wife who works in the Acctg' field, I am curious to hear what she says, especially if it matches what my accountant said, I hope so, otherwise I might have to ask for a refund on the money I gave him if he provided the wrong answers.

Re: Reselling the house in the future: I dont think I would do that until I would atleast retire. I just turned 43 so I have a ways to go. If I take out a 30 yr loan to do the buyout now, I might have to work until 73 and the house is paid off until I retire, unless I get married between now and then.

In case you missed it: I had written earlier that a legal contract will be drawn if we do the buyout such that if I do decide to sell the house, I would give back my brothers the amount each of: (2007 appraised value/3)- $120K. This is only fair and I agree with it, otherwise, I could just do the buyout for $240K and then turn around and sell the house for $500K+ and keep all the money for myself to buy another house. If house appraises for $510K now, that means I would be obligated to pay each brother $50K if I resell, and I also wonder if they pay taxes on it ?? However, it is not likely they I will sell this house anytime soon.

It is also my understanding that I would have to do the buyout to become the sole owner, and then live here atleast 2 years in order to qualify for cap gains exclusion if I decide to sell.

Called accountant today. I asked about the $12K idea to avoid taxes and he said its do-able.

Kevinh5 (talk|edits) said:

6 February 2007
Make sure the accountant is allocating the basis between the life estate and the remainder interest correctly. Otherwise you are going to get a wrong answer.

BeatleFred (talk|edits) said:

7 February 2007
So much for simple math :) I looked over the numbers that I posted here and they are off slightly. I copied and pasted the correct info below. Now Kevin, the information is very straightforward. Are you saying that the basis of me and my 2 brothers (which you imply is called the remainder interest) that I have listed as $81,500 is incorrect? Or the basis that I have listed for my father as $37,500 is incorrect?

When you say the basis of the life estate are you referring to my father's basis of $37,500 or some other number?


These are the facts of what was discussed at the accountant's office:

a) Parents bought house in 1970, exact price of house is $25,500. b) Parents made last payment on the mortgage loan in 1995. House paid in full. c) Life estate and quit-claim deed was legally made by lawyer in 2004. d) Mother passes away in 2005. e) Brother files Form 709 gift return for '04 tax year on which he lists the house's value as $414K. and he also lists the cost of home improvements over the years as $50K. From what was written above, I told the accountant that I want to do a buyout now with my 2 brothers whereby I give each of them $120K so that I will be the only legal owner of the house. House has not been officially appraised, but its current vlaue is estimated to be $510K. I cant afford to do a buyout at the fair market value, thus my best offer to brothers is $120K ea, which they accept. The question is: do they have to pay taxes on that money, and how much?

The following info below is what I got from the accountant:

Father's basis: 1/2 (orig cost + home improvement) = $37,500

Mother's basis: deceased, thus step-up = FMV at time of her death/2 = $414K/2 = $207K

Father + Mother basis = $244,500

Basis for each brother (there are 3 brothers) = $244,500/3 = $81,500.00

Result: Brother in Florida has no state income tax, thus he would pay 15% federal on the difference between $120K and $81, 500, which equals 15% on $38,500.

Brother in Long Island would pay an additional 6.5% state tax as well as 15% federal, for a combined 21.5% on $38,500.

Everyone in agreement here, or is there anything thats been overlooked?

Kevinh5 (talk|edits) said:

7 February 2007
The value of the retained life estate changes as dad ages. The remainder interests are the corrolary of the retained life estate.

BeatleFred (talk|edits) said:

8 February 2007
My father is 87, the life estate was created in November 2004, how much did the life estate value change from then until now?

Would it change by any amount that is significant enough to affect the amount of taxes that my brothers would pay if the buyout is done now?

Is it not correct to state that my father's basis is fixed at $37,500 and stays that way until he passes?

As I asked before, but no reply: is the value of the life estate that you speak of, something different than my father's basis?

I paid an accountant and he didnt mention anything to me about the value of a life estate changing per father's age. Specifically how does your information affect the results of what I presented in my previous message>

Kevinh5 (talk|edits) said:

8 February 2007
Did you tell the accountant that dad had the life estate and all you 3 had were the remainder interests? Did he ask to see the gift tax return that was filed?

BeatleFred (talk|edits) said:

9 February 2007
Kevin:

After everything that has been written here, and written numerous times, I think its quite evident that I would tell the accountant my father has a life estate. I have shown what the numbers came out to, and I reposted it again a mere 4 posts above this one. Yet you still seem unwilling to simply verify the accountants results on the taxes my brothers would be. Yes, I showed him the gift tax return that was filed. What about it?

You state that me and my 3 brothers have a remainder interest. If it means the same thing, what I can tell you is that my family has a quit-claim deed whereby me and my 2 brothers are all 'tenants in common'. That is the form of ownership that we have in the house.

Now Kevin, if you are suggesting that the accountant might have overlooked something which would change the amount of taxes that would be paid, be it more or less taxes paid, do you think you could just spit it out already and say what it is? Thanks.

typo above: ... 'Yet you still seem unwilling to simply verify the accountant's results on the taxes my brothers would-> PAY.

Kevinh5 (talk|edits) said:

9 February 2007
I don't believe you can be Tenants In Common in the present interest if dad still retains a life interest. That might be a state law thing, I'm not sure. I do believe you can be TIC for the remainder interest. Do you have access to the actual deed to check?

BeatleFred (talk|edits) said:

9 February 2007
Google search on 'life estate tenants in common taxes' yields alot of info that one can read, for example:

http://www.osbar.org/_docs/public/lioa/chapter6.pdf

Kevinh5 (talk|edits) said:

9 February 2007
I agree. There is a lot that one can read, and that may be a very good exercise for you to learn what Tenants In Common and Remainder Interest and Life Estate mean. And the answer to the question of how your specific deed reads is....?

BeatleFred (talk|edits) said:

9 February 2007
The answer to the deed is thats its a quitclaim deed. It lists my parents as Grantors, and the 3 sons as grantees. The rest of it is written in legalese

and gives a description of the property.

I already know what a life estate IS. What I dont exactly know is what taxes have to be paid on it. The information I presented is all the information that I got from the accountant. All I basically asked is for someone here, a person who is either an accountant themself, or otherwise has very good knowledge of tax laws, to look over the information, and simply verify that what I was told is either correct or not correct. And if not correct, to explain why it isnt.

At this point, Kevin, I'd like to thank you for your time (and the others who also replied). But I have no further interest in continuing this discussion with you. I posted the link not so much for my own benefit, but for yours, so that YOU might learn a few things. Prolonging this discussion with you at this point is a waste of time. You seem to hint that the accountant didnt tell me the whole story, yet when I ask YOU to elaborate, you dont, and it feels like I have to keep trying to pry information from you. So, in conclusion, thanks, but no thanks. Keep the info to yourself. I will either learn it on my own or consult with another accountant on my own time in the hopes of arriving at the truth of what taxes have to be paid or not paid. Goodbye.

Kevinh5 (talk|edits) said:

9 February 2007
You are welcome for all of our help, Beatle. Good luck with your house purchase.

I honestly don't understand why you think we should do the math for you or double-check the math of your accountant. You are not paying us. You paid him. I merely wanted to point out that the accountant might not have considered all the factors that contribute to basis when someone has a remainder interest and the life estate holder is still alive. You would not check your deed to see exactly how the title reads, you only said that it is a Quitclaim Deed and you thought you 3 brothers were Tenants In Common. My concerns for how the deed is written may not apply to property in your state, but that is for an attorney to decide. I am hoping you folks actually got a competent attorney to prepare the deed and did not just get on some free legal question web-site to come to your conclusion as to how the deed should be written. I pointed out how that is written seems inconsistent with a 4th person holding a life estate in the property. Anyway, you got your tax advice from someone you paid, and so that is a positive thing.

For those still reading this thread, and for future users in a similar situation, here are my thoughts on the subject since yesterday:

1) Fred should determine whether he (and his brothers) were given a present interest in the house or only a future interest (that's why I wanted him to find his deed to determine how title was held). State law may have an impact on this.

2) If they were not given a present interest, then they have to determine the allocation of dad and mom's basis to the future interest portion of the gift. This would be considered a split-interest gift. There is a lot written about split-interest gifts for charitable purposes, but this is not a charitable split-interest gift. For instance, if this had been a charitable split interest gift, we would look to Reg. Sec 1.170A-12 http://a257.g.akamaitech.net/7/257/2422/01apr20051500/edocket.access.gpo.gov/cfr_2005/aprqtr/26cfr1.170A-12.htm for guidance as to how to divide the basis between the present interest (dad's life estate) and the future interest (the 3 brothers).

3) It would be much easier and simpler to caclulate if dad were to die (step up in basis), sell out and take his §121 exclusion, or terminate his present interest (as Dennis had suggested). THEN even an engineer like Fred could do the elementary grade school level math.

BeatleFred (talk|edits) said:

10 February 2007
Well, atleast now we're getting somewhere in that you are writing information in a step-by step manner that can point me in the right direction

of how to get an answer.

I dont know anything about '121' exclusions', unless I do a Google search on it.

As for present vs future interest: If you had stated these exact words before, I would have asked the lawyer. I will ask him again, I can try calling his office now but I am not sure if he is open on the weekend.

I checked the quitclaim deed, but it says nothing on it with words about a present or future interest.

As far as I know, it was my parents intention to transfer the house to us when they were both gone, and the house would be owned equally by me and my 3 brothers. I imagine the lawyer would write the legal paperwork so that the transfer would be done in however way results in no, or a minimum, of taxes being paid. I presume the step up in basis would be a high enough step-up by far, such that no taxes would have to be paid.

My parents updated the will and created the life estate & quitclaim deed in 2004 when my mother was sick, but still alive. The subject of my buying out the house was something I did not think about then. So at this time, I dont know if what we have in my situation is a present interest or future interest. It seems like both. ?? -> my parents wanted to transfer the house to us, thus a future interest, but there is a life estate that my father has now, (my mother passed away so obviously her life estate does not apply anymore- she is not alive to physically come back to live in the house if she wants to as my father can), and since my father has a life estate, BUT me and my brothers are all equal owners of the house NOW (tenants in common), it also seems that we have a present interest in the house.

Dennis (talk|edits) said:

10 February 2007
To clarify my position. The actuarial value of the residual life estate held by each brother based on the §7520 tables is about $129,000. This means that $129,000 in the hands of a brother now is worth roughly what he would be entitled to on father's death and that $120,000 is not the worst deal in the world. Further, this is an interest that is subject to both minority and liquidity discounts such that a sale at $80 some odd thousand basis is not unreasonable. If father keeps life estate with Beatle as the only remainder interest I think the transaction can be structured such that brothers recognize no gain. Whatever else he gives them is all in the family.

Kevinh5 (talk|edits) said:

10 February 2007
Dennis, (and others) would you allocate basis in the remainder interest using the §7520 rules too? My thoughts are yes, but I haven't found it exactly except for a charitable split interest gift, which is yes (but being a charity basis doesn't matter).


Also, would that remainder interest basis be fixed at the date of the gift, or would it change over time as dad gets closer and closer to the ultimate tax break? My thoughts are since a gift of a future interest isn't a completed gift then the basis changes over time.

BeatleFred (talk|edits) said:

10 February 2007
Thanks for the extra Info, Dennis. The accountant I saw never mentioned anything about 'actuarial values', thus one example why

I was concerned that what he told me was accurate or not, and if he gave me the full picture or left alot of relevant stuff out. I am not sure how the $129K is derived from a table, I would think the fair market value of the house would be a significant factor.

Its funny, Mortgage books are written on how the IRS wants to "help" people become homeowners by allowing various deductions. I think if the IRS really wanted to feel benevolent, they should make their estate/ giftlaws easier to decipher, and reduce any applicable taxes to begin with.

I know that you can $12K gifts per yr tax-free, the question is how does the IRS feel about the way I propose to do it, since I am not technically breaking the law, I am merely postponing extra payment to my brothers so that we are still keeping within the $12K rule over the time period it takes for me to give them the full $120K.

BeatleFred (talk|edits) said:

10 February 2007
This post moved from the discussion on NON TAX PROS AND DO IT YOURSELFERS:

PS: to save time by having to scroll down "the long and winding road" of the entire thread in the link above, I copy and paste the pertinent facts here:


These are the facts of what was discussed at the accountant's office:

a) Parents bought house in 1970, exact price of house is $25,500. b) Parents made last payment on the mortgage loan in 1995. House paid in full. c) Life estate and quit-claim deed was legally made by lawyer in 2004. d) Mother passes away in 2005. e) Brother files Form 709 gift return for '04 tax year on which he lists the house's value as $414K. and he also lists the cost of home improvements over the years as $50K. From what was written above, I told the accountant that I want to do a buyout now with my 2 brothers whereby I give each of them $120K so that I will be the only legal owner of the house. House has not been officially appraised, but its current vlaue is estimated to be $510K. I cant afford to do a buyout at the fair market value, thus my best offer to brothers is $120K ea, which they accept. The question is: do they have to pay taxes on that money, and how much?

The following info below is what I got from the accountant:

Father's basis: 1/2 (orig cost + home improvement) = $37,500

Mother's basis: deceased, thus step-up = FMV at time of her death/2 = $414K/2 = $207K

Father + Mother basis = $244,500

Basis for each brother (there are 3 brothers) = $244,500/3 = $81,500.00

Result: Brother in Florida has no state income tax, thus he would pay 15% federal on the difference between $120K and $81, 500, which equals 15% on $38,500.

Brother in Long Island would pay an additional 6.5% state tax as well as 15% federal, for a combined 21.5% on $38,500.

Everyone in agreement here, or is there anything thats been overlooked?

BeatleFred (talk|edits) said:

10 February 2007
The whole point is: If my brothers DO have to pay taxes, can it simply be bypassed by my paying them only up to their basis now (I give

each brother $80K now), and I pay them in $12K tax-free gift installments over the next 4 years to make up the $40K balance owed.(120K-80K= 40K)

Does the IRS have a problem with my being able to buy the house Ive been living in for the past 37 years, such that they consider a sale for significantly less than FMV to be tax fraud? In other words, when all the paperwork is filed at the house closing, and its recorded that a house in my neighborhood sold for just $160K when its actual value is atleast $500K, will that set off any red flags somewhere to cause problems in completing the transaction?

Dennis (talk|edits) said:

10 February 2007
Value of a remainder interest increases over time. I make a distinction between basis when remainder is sold rather than whole. (I don't know whether that is right either) For gifting purpose the value of the retained life estate is zero so it would seem that while the life estate is in force the remainder interest is entitled to 100% of the basis.

Kevinh5 (talk|edits) said:

10 February 2007
I don't follow that, Dennis. The value of the remainder interest is the NPV using the §7520 rules and the AFR at the date of the gift. Therefore wouldn't the value of the retained life estate be the difference between FMV and the §7520/AFR FI? If so, I would want to allocate basis using the same ratio. Why do you say the value of the LE is zero?

Birdman (talk|edits) said:

10 February 2007
This is great stuff. You all are very patient.

Death&Taxes (talk|edits) said:

10 February 2007
It is good stuff, terrific! btw Kevin did not have a beard when this discussion began.

Dennis (talk|edits) said:

10 February 2007
Note that different states have different laws. Here we are dealing with New York, where in the case of sale of a property with a retained life estate the life tenant is entitled to his actuarial share of the proceeds. Basis is allocated in that manner as well. In the case of a sale only of a remainder interest however basis would appear to be determined under Sec. 2702(a)(2)(A). If the value of the retained life estate is zero, remainder should get entire basis. On the other hand, there are other interpretations involving Sec. 2519

BeatleFred (talk|edits) said:

10 February 2007
My hair has also gone a bit grayer since the discussion began :)

Kevinh5 (talk|edits) said:

10 February 2007
Dennis, that information leads me to the same conclusion that I suspected - that (at least for states with similar real property laws) the basis changes over time based on the actuarial tables using the life expectancy of the holder of the retained interest. Beatle has a moving target that can't be known until the date of the sale.


There you are, Beatle Fred! You are asking this question too early.

BeatleFred (talk|edits) said:

10 February 2007
Well, then I suppose a phone call is in order to the accountant to have him explain to me what you guys brought up.

Can you tell me in simple words what I should ask the accountant? Can I just bring up the term actuarial tables and say that the basis is not a fixed number as his conclusions led me to believe?

Thank goodness its Saturday. I think I'm going to need a beer or two tonight to unwind from all this tax stuff, I'll toast one to you, Kevin :)

Kevinh5 (talk|edits) said:

10 February 2007
That answer only applies if you don't own a present interest. Since he is a NY attorney also, he should be able to look at your deed and tell you whether you have a present interest or only a future interest. If the answer is a future interest, then just provide him a printout of this whole discussion.


Otherwise, you'd be having to have him explain AFRs, §121, §7520, retained life estates (present interest), and remainder interests (future interests) to you. That would take at least 6 to 12 hours to do a good job. Assuming you already had the basics of income, gift and estate tax law down pat.

Since you want to minimize your accounting bill, here is the link to Publication 1457 if you have a future interest.

BeatleFred (talk|edits) said:

10 February 2007
Alrighty, I will call him and see what he says. I expect he probably wont be too thrilled to have me question him, as if to imply

I didnt get the whole story the first time around, but I'll do my best to be polite, and hopefully he'll return the courtesy. As I mentioned before, my brother intends to speak with the ex-wife tommorrow, so maybe she can give some insight into this. With that said, my priority right now is to have a roast beef sandwhich, extra mayo, salt & pepper, and while I'm eating, I can ponder the tax issues :) Coincidentally, while I was away before doing food shopping, I ran into a neighbor who happened to be in a similar situation several years ago, though he told me no taxes were paid. Wish I couldve chatted with him more, but it was too cold outside, maybe another time. Dont know all of his details, but if he & his family managed not to pay, I cant see why the odds are it wont be the same in my sitution.

LJACPA (talk|edits) said:

10 February 2007
I thought it was pretty cool that I started the most viewed discussion on here (11,436), but am now amazed that this unbelievable, incredibly verbose discussion already has 111 responses to the 1,391 views vs. only 77 responses to the 11,436! Here's my two cents worth, late on a Saturday afternoon. 1. $100 to an accountant - I'm sorry but I could not give you even one hour for that. You get what you pay for. 2. As the technician you are, how much could you have made at your hourly rate for the time you have spent explaining this one issue? Pay a professional a reasonable fee and get all the answers you need. 3. I gave up reading after about the 50th response, so the response I'm going to give may have already been mentioned or at least touched on. You said in your original post that you want to be sole owner, yet you intend to "put in legal writing" that you will split the proceeds of any future sale with your brothers, less the $120,000 you will pay each now. Why, then do you even want to sell? Why can't you just keep the house, live in it as you are, take out a home equity loan (I guess you'd have to get everyone's approval, maybe), fix the house up and forgot trying to sell it? The only thing I see that that will accomplish is to get cash into your brothers' hands, is that the point? You could probably accomplish this is another non-taxable way though it might be over a period of time.

Blrgcpa (talk|edits) said:

10 February 2007
Each circumstance is different. The details of the neighbors situation may be different than your situation. Keep the ex-sister-in law out of it. She might want a piece of the pie.

If you wait until your father dies, there will be the step up in basis and no cap gain tax for your brothers.

What is your sudden hurry to buy the house out from under your father? You are concered about the expense. In a few years, you may be able to afford it more comfortably.

BeatleFred (talk|edits) said:

10 February 2007
LJA,

I was thinking the same thing as you, this discussion simply refuses to die. I think I might have a good shot here at going for the record of most viewed discussion, cheer me on, mate :)

To answer your question: I can not predict if I will stay in this house forever. It depends on if I get married, stay single, or decide to get a job elsewhere, to name a few factors. If I do the buyout now with my brothers, in fairness, they need some type of legal contract, such as a promissory note, as protection, which I understand, otherwise, after they sell the house to me for $240K, I could simply turn around and sell it for atleast true market value, which is probably $500K+. Now, I wouldnt backstab like that, but nevertheless its something that they would want in writing.

As for the other question: actually, to NOT to do the buyout now is an option I have. As I mentioned early-on, as long as my father is still alive, my brothers are not pushing me to do the buyout now. I can go along as I have been, living here by myself and paying all the bills without a mortgage loan hanging over my head to repay every month. But its inevitable that the matter will have to be settled at some point, so perhaps its best to agree on everything and settle it now while my father is still around. One reason that favors doing a buyout now is the Interest rates are relatively low. If the buyout is done later, and the Interest rate sgo up, it will mean less money that I can borrow, and I dont have much leeway in being bale to borrow less to do the buyout and also pay closing costs.

Quite honestly, I would rather take out a loan to remodel the house, but it is my understanding that I would not be able to get a loan easily, because I dont have full ownership of the house, only a 1/3rd of it along with my father's life estate privilege.

The other compelling reason to do the buyout now is that the lawyer told me me and my brothers are tenants in common. So...., God forbid something happens, one of my brothers gets into a bad situation and is sued, I could get involved because a lien could be placed on this property being that my brother is an equal co-owner, comprende'? Furthermore, I dont get along at all with my brother's wife (not ex-wife the accountant, his present wife, rather), and I believe it is correct to say that if something happens to my brother, then his wife (and kids) replace him as being a 1/3 owner of this house, which is not what I want, thus a buyout makes everyone independent from each other.

BeatleFred (talk|edits) said:

10 February 2007
PS: Keep in mind, this discussion has also taken place in the 'do it yourselfers' thread, so did you add in the replies from that to the overall tally

of 'most viewed discussion'? :)

LJACPA (talk|edits) said:

10 February 2007
Just one more thought before I fall asleep, you do have some potential legal issues to deal with. A good attorney, though not ever cheap, might be able to set this up in a trust or something like that to protect it, allow you to hang on to it for now and possibly a number of other opportunities that could protect everyone and accomplish some if not all of what you all want to accomplish. It just seems like trying to sell it at this point might create so many issues, not the least of which could be the tax impact on your brothers. Just a thought, or two.


Rgtaxservice (talk|edits) said:

11 February 2007
Congratulations Kevin. You are now part of the establishment.

Death&Taxes (talk|edits) said:

11 February 2007
But like winning an Oscar, Kevin must thank those responsible like Beatle.

Dennis (talk|edits) said:

11 February 2007
While I can sympathize with Tim's desire to have Forum Awards generated by particiapants, bear in mind that the right to give is also the right to take away. Personally I would rather leave the responsibility with the Administrator.

Kevinh5 (talk|edits) said:

30 May 2014
For Belle.

Kevinh5 (talk|edits) said:

30 May 2014
For Belle.

Belle (talk|edits) said:

May 30, 2014
Why thank you, thank you very much :-)

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