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#4
07-26-2004, 06:26 AM
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 Re: Gift / Estate tax question Dan Evans wrote: - quote - > Fred Chen" <fchen12[at]comcast.net> wrote:
Agreed. My question is whether the lender then has phantom> > If the debt is forgiven, it will be treated as income to the > > daughters and triggers 1099-C. > Not if the debt is forgiven as a lifetime or testamentary > gift. taxable income in the amount of the interest that he should have collected but didn't. Stu << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#3
07-21-2004, 03:06 AM
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| Re: Gift / Estate tax question Fred Chen" <fchen12[at]comcast.net> wrote: - quote - > If the debt is forgiven, it will be treated as income to the
Not if the debt is forgiven as a lifetime or testamentary> daughters and triggers 1099-C. gift. As pointed out in Revenue Ruling 2004-37, 2004-11 I.R.B. 583: "Not every indebtedness that is cancelled results in the debtor realizing gross income by reason of discharge of indebtedness within the meaning of sections 61(a)(12) and 108(a). 'Debt discharge that is only a medium for some other form of payment, such as a gift or salary, is treated as that form of payment, rather than under the debt discharge rules.' S. Rep. No. 1035, 96th Cong., 2d Sess. 8 n. 6 (1980), 1980-2 C.B. 620, 624 n. 6." See also, Helvering v. American Dental Co., 318 U.S. 322 (1943), in which the Supreme Court recognized under prior law that discharge of indebtedness may be a gift and not income. *Dan Evans *Author of the Tax Protester FAQ *http://evans-legal.com/dan/tpfaq.html << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#2
07-13-2004, 11:45 PM
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| Re: Gift / Estate tax question Fred Chen, CPA in Maryland "Raymond" <raymond912002[at]yahoo.com> wrote: - quote - > Five daughters each owe their father between $150,000 and $
If the debt is forgiven, it will be treated as income to the> 250,000. The father gives each daughter yearly, the annual > gift tax exemption amount. > At his death, it is the father's intention to forgive each > daughter's debt. Outside of the daughters debt, the father > will have a sizable taxable estate. > Knowing that the forgiven debt would be included in the > father's estate, would there be any difference (other than > GST implications) between forgiving the debt versus having > each one pay off their debt to the estate before they > receive their share of the estate ? For simplicity, lets > assume all the daughters owe the same amount. Thank you. daughters and triggers 1099-C. The daughters will be far better off paying back the debt then take the distribution income tax free. It doesn't matter for estate tax purpose because the debts, as assets, are included in the gross estate anyway. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#1
07-13-2004, 11:26 PM
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| Re: Gift / Estate tax question "Raymond" <raymond912002[at]yahoo.com> wrote: - quote - > Five daughters each owe their father between $150,000 and $
Whether its a debt receivable or cash, the end result is the> 250,000. The father gives each daughter yearly, the annual > gift tax exemption amount. > At his death, it is the father's intention to forgive each > daughter's debt. Outside of the daughters debt, the father > will have a sizable taxable estate. > Knowing that the forgiven debt would be included in the > father's estate, would there be any difference (other than > GST implications) between forgiving the debt versus having > each one pay off their debt to the estate before they > receive their share of the estate ? For simplicity, lets > assume all the daughters owe the same amount. Thank you. same. By the way, there is no GST on gifts to immediate descendants. -- David M. Woods, EA, ChFC, CLU Woods Financial Services Norwood, MA 02062 www.woods-financial.com << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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07-13-2004, 10:29 PM
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| Re: Gift / Estate tax question Raymond912002[at]yahoo.com (Raymond) wrote: - quote - > Knowing that the forgiven debt would be included in the
No.> father's estate, would there be any difference (other than > GST implications) between forgiving the debt versus having > each one pay off their debt to the estate before they > receive their share of the estate ? *Dan Evans *Author of the Tax Protester FAQ *http://evans-legal.com/dan/tpfaq.html << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#-1
07-09-2004, 05:58 PM
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| Gift / Estate tax question Five daughters each owe their father between $150,000 and $ 250,000. The father gives each daughter yearly, the annual gift tax exemption amount. At his death, it is the father's intention to forgive each daughter's debt. Outside of the daughters debt, the father will have a sizable taxable estate. Knowing that the forgiven debt would be included in the father's estate, would there be any difference (other than GST implications) between forgiving the debt versus having each one pay off their debt to the estate before they receive their share of the estate ? For simplicity, lets assume all the daughters owe the same amount. Thank you. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
| Tags |
| estate, gift, question, tax |
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