On Aug 30, 2:24 pm, "Don" <dwz...[at]telus.net> wrote:
- quote -

Totall agree. My parents were probably guilty of this when I was
younger and I probably have been also. Like I said, the problem with
most crimes is getting caught. I speed and sometimes jaywalk too. But
this particular incident probably goes unnoticed much more often than
say... murder.

"kastnna" <kastnna[at]auburnalum.org> wrote in message
news:1188481281.179195.323430[at]r34g2000hsd.googlegroups.com...

- quote -

Granted that all this is true technically, but enforcement is another
matter. I wonder how many kids get a car at graduation time and how many
cars get reported to the IRS as gifts. Or how many parents give their newly
weds a downpayment on a house, possibly with the idea of the money being
repaid some day, but then the years go by and there is never repayment. I
suspect this kind of "gift" or "loan" or whatever you call it, happens too
much to track down. it would cost the IRS more to strictly enforce the rules
than the tax money that would be recovered.

On Aug 30, 7:40 am, "Don" <dwz...[at]telus.net> wrote:
- quote -

Its probably not a BFD unless you get caught (isn't that the problem
with most crimes?). Gifts are private (that's one of their benefits)
so like you said no one would know unless the IRS started digging.

As for the loan alternative: If there were no written agreement, and
more importantly, the donor showed no interest income from repayment
of the loan, the IRS would come after you for that. Loan interest must
be charged and reported as income, even if never actually paid. There
are also rules regarding the discharging of debts and reporting the
debt as income that would fall on the donees shoulders. Whether they
would get you for the non-reporting of interest income or for the non-
reporting of gifts exceeding the annual exclusion amount I do not
know.

In both cases, none of this applies unless your dirty laundry gets
aired (you can also get audited for an unrelated reason). Ignoramus,
if the IRS did start digging around and discovered you were actively
trying to "hide" your gifting (by withdrawing varying amounts from
banks to conceal your actions) you would likely be on the hook for
both defrauding the IRS and violating the Bank Secrecy Act. Not good.

As far as I'm concerned, do whatever you want. With the $12k annual
limit, the ability to utilize both husband and wife on both ends of
the gift (if applicable), and the Unified Credit to draw off of, its
just seems unlikely that most people will gain any benefit from
concealing the gift. Really, only the wealthy have a reason to even
risk it.

"Ignoramus14352" <ignoramus14352[at]NOSPAM.14352.invalid> wrote in message
news:ieudnbIpJ9mQeknbnZ2dnUVZ_q7inZ2d[at]giganews.com...

- quote -

Furthermore, it would be difficult to distinguish a gift from a loan. Lots
of parents "loan" money to their kids with the idea that it will eventually
be paid back but then some years down the road just say "Forget about it."

On Aug 29, 5:06 am, Ignoramus14352 <ignoramus14...[at]NOSPAM.
14352.invalid> wrote:
- quote -

The OP appears to be an accountant or tax preparer. I'd guess that
there are rules against preparing a return containing statements known
to be false.

Personally, I think estate and gift taxes are unethical when rates are
about 50% and when they apply to wealth derived from income that was
already taxed. I think triggering capital gains taxes upon death would
be fair, except when there is a surviving spouse. When taxes are
unjust, I think tax evasion is ethical, but this is a philosophical
rather than a legal issue.

Call me silly, but I do not understand what is the BFD about these
"gifts". Rather large amounts of money can be transferred to the son
in question in cash and it is hard to prove anything. Unless we are
talking about thundreds of thousands of $$, I personally would just
take cash from the bank in varying amounts and give it to the son in
question (though I hope that such a need would not arise). Come on
people.

i

"Chris Fasano" <ChrisFasano[at]verizon.net> wrote in message
newsan.2006.12.12.15.30.28.658160[at]verizon.net...
- quote -

Gift tax law would indicate that any transfer (including support for a
dependent child) would be considered a gift. However, the courts have ruled
that a legal obligation for support is not a gift. State law would generally
decide if there is a legal obligation of support. Since a parent has the
legal obligation to support a minor child these transfers are not considered
gifts. However, a parent has no legal obligation to support a non-minor
child and these transfers would be considered gifts. Because income tax law
and gift tax law operate independently, a parent that supports a non-minor
child that meets the dependency tests could claim the child as a dependent,
but the transfers would still be considered gifts.

H

I basically subscribe to the position that, except for the specifically
exempted education and medical expenses, if you can't claim them as a
dependent on your tax return, it's a gift.

Mark Bole wrote:
- quote -

"Tad Borek" <borekfm[at]pacbell.net> wrote in message
news:vfYfh.23094$9v5.6721[at]newssvr29.news.prodigy.net...
- quote -

Nice citation! Here's a followup, that amplifies (in its words) RR 54-343,
and acknowledges the exemption for gifts under (then) $10,000.

Revenue Ruling 82-98
http://www.taxlinks.com/rulings/1982/revrul82-98.htm

It states that "any direct, unreimbursed payment made by the donor on behalf
of any individual to any person who provides medical care (as defined in
section 213(e) of the Code) is not treated as a transfer of property by gift
for purposes of the federal gift tax. Thus, medical expenses, such as those
for medical insurance, diagnosis, and treatment that are paid directly by
the donor to the service provider are not subject to the gift tax. On the
other hand, where medical expenses are paid by the donee, payments by the
donor to the donee to reimburse the donee (whether the payments are made by
the donor before or after the donee pays the expenses) are subject to gift
tax. ..."

"RR 54-343 continues to be applicable in cases where funds are distributed
directly to the donee ...."

Note: One should check to see whether this is still good law, and this post
certainly does not constitute legal (or tax) advice.

Mark Freeland
BnetOnewsX[at]sbcglobal.net

Mark Bole wrote:
- quote -


It all hinges on whether the parent is legally obligated to provide
support to the individual. If so, then any expenditures made under that
duty aren't considered gifts. If not, then it's a taxable gift subject
to the $12,000 annual exclusion, whether it's a child, friend, neighbor,
etc.

I don't know if it's available from a public source but there's a short
revenue ruling stating this: Revenue Ruling 54-343. Parent paid
mortgage/etc for injured (non-minor) son...ruling: "taxable gift."
Actually even medical expense payments were considered gifts in the
ruling because the tax code didn't exempt them at the time (as it does now).

The scope of "support" would be defined by state law so is probably a
little different in each state. I don't know how the concept applies to
a disabled non-minor child.

-Tad

Chris Fasano wrote:

- quote -

I have been wondering, in general, what is the difference between a gift
and support, and then this question came along to ask more or less the
same thing.

IRS Pub 950, also referenced indirectly by another poster, states a gift
is when you don't "[expect] to receive something of at least equal
value in return".

Might a specific property (including money) be both a gift and support
in some situations? Whether or not it is taxable is not what I'm
curious about in this context, just what the definition is. For that
reason, I will also post this question on misc.taxes.moderated, since it
seems more of a tax issue than a financial planning issue.

If a parent supports a minor child, since such support is usually
presumed to be a legal obligation of the parent, does that mean it is
not a gift? If a parent supports an adult child or some other relative,
then what? What about supporting someone who is not related at all?

What if you give money to someone, and then they support themself with
it? A gift, or support?

-Mark Bole

Chris Fasano <ChrisFasano[at]verizon.net> wrote:

- quote -

Per the IRS:

The general rule is that any gift is a taxable gift. However, there
are many exceptions to this rule. Generally, the following gifts are
not taxable gifts.

*
Gifts that are not more than the annual exclusion for the
calendar year.
*
Tuition or medical expenses you pay for someone (the educational
and medical exclusions).
*
Gifts to your spouse.
*
Gifts to a political organization for its use.
*
Gifts to qualified charities (a deduction is available for these
amounts).

http://www.irs.gov/businesses/small/...164872,00.html
---------

In all likelihood, a severly handicapped child could well qualify for
the medical expense exclusion, so she's correct as far as that goes.

However, if her son is just lazy and not handicapped, then I think you
are quite correct - she should be filing a gift tax return.

"Chris Fasano" <ChrisFasano[at]verizon.net> wrote in message newsan.2006.12.12.15.30.28.658160[at]verizon.net...
- quote -

I would be interested in any replies, since I'm financially supporting
a grown daughter who is unable to work due to a medical condition.

--
John Richards

A client who provides her adult son with cash payments well
in excess of the annual exclusion insists my advice to her regarding the
nature of this transfer, a reportable gift, is incorrect. Her response is
along the lines of "my son is a bum who can't hold down a job, and I have
to support my child. If he was mentally retarded and lived in a group home
and I had to pay the rent there and all the associated costs, that
wouldn't be considered a gift, would it? So why is it a gift when I give
money to my idiot son?"

Notwithstanding their relationship needs counseling, are there some
provisions in the gift tax law I'm missing whereby parental support for a
severally handicapped child (which isn't her situation anyway) is not
considered a gift for gift tax purposes?