markdiver wrote:
- quote -

You are still confusing the income tax on the gain with a
gift tax.

If the children received the property as a gift from their
parents, and then sold it, their basis in the property for
calculating gain is the parents' basis (IRC Sec. 1015(a)).
Therefore they (not the parents) owe NY and federal income
tax on the gain. The NY tax that was withheld will be
allowed as a credit against the actual tax due on the gain.
Depending on the amount of gain they may receive a partial
or full refund, or they might owe additional tax.

Whether the amount of the gift (the FMV of the property) is
subject to federal or NY gift tax is a totally different
question, unrelated to the income tax effect of the gain or
loss on the sale.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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Paul A Thomas wrote:
- quote -

Thanks for all the replies.

After talking with my brother-in-law, what actually happened
was that my wifes parents gave them the actual property
outright, then the kids sold it and paid the taxes to NY
state. My brother-in-law believes the value of the property
also falls below the taxeable gift amount and we should be
able to recover the 2% NY withheld.

Mark.

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"markdiver" <markrstephen[at]hotmail.com> wrote

- quote -

Ahhh, no. If her parents sold the property, then the tax
due (if any) is the responsibility of the parents, as is any
refund (due to overwithholding) the responsibility of the
parents.

The children, who received cash, have no claim to the taxes
withheld.

- quote -

Ask the parents to file for a refund (if one is actually
due).

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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"markdiver" <markrstephen[at]hotmail.com> wrote:

- quote -

Gifts are never subject to income tax by the recipient, and
gift tax, if applicable, is the responsibility of the donor,
not the recipient.

- quote -

I'm filling in the blanks here, but it sounds like your
in-laws paid this tax, whatever it is, at the closing. They
may have a claim for some sort of refund, but your wife
doesn't.

--
Phil Marti
Clarksburg, MD

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Last January, my wife was given some money from her parents,
who are divorced. They sold some property in NY (we live in
CA) and gave each of the kids $18K.

Since my inlaws are divorced, I assume that the money falls
under the gift allowance and should be tax free ($11K from
each parent).

But the state of NY took 2% in taxes and the lawyer who
handled the sale said we can get it back.

So, my question is, do I just file a standard NY state
income tax and state our income, etc, but say we dont live
there, or is there an easier way to do this to get the money
back?

Any help is gratefully appreciated,

Thanks.

Mark.

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