smcdowellNo...Spam[at]charter.net (Steve) wrote:
- quote -

No, see Reg. 25.2511-11(h)(4) that is the support for
Harlan's answer.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Bernard Cosell wrote in

- quote -

Of course you are interested in US implications, but it made
me think with Europe moving more to a common currency this
would be a great way for relatives in different countries to
share some of their funds. My wife reqularly sends money
overseas using Western Union. It would be nice if she could
do this using a joint checking account or debit card.

- quote -

--
Mike

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Bernard Cosell wrote in

- quote -

I have a joint account with my Mom. Most of the checks I
write on this account lately are for gifts to her decendents
on her behalf.

I also have several trust accounts where she is the trustor
and I am the sole trustee. Most of the checks written are
to pay her bills. Some are cash withdrawals to reimburse me
for cash expenses which I have paid on her behalf. The tax
ramification in these cases are as if they were her
accounts. She pays taxes on all income and capital gains
generated from or deposited into these accounts. Another
set of accounts are trust accounts where she is the
beneficiary and I am the trustee. Checks written on these
accounts are as either income to her or for payment of trust
related deductible expenses (eg. accounting, tax, legal and
trustee fees are paid from these trust accounts).

You were probably interested only in cases where one party
was not the trustee/fiduciary.

--
Mike

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Bernard Cosell wrote in

- quote -

Bernie is the Moderator of misc.legal.moderated (the guy who
sends rejection notices for lengthly posts). So I took this
as an intentional money laundering scheme where (A) earns
the money and to obfuscate the source gives the cash to (B).
(B) declares the income, pays the taxes, and deposits the
money in an account to which (A) has access.

The taxes are not sorted out. (A) owes the taxes and the
penalties. (A) and (B) get prison sentences.

Dick

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

smcdowellNo...Spam[at]charter.net (Steve) wrote:
- quote -

It's a gift, but may not be a completed gift until he
actually takes it out or otherwise uses it.

Stu

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"Harlan Lunsford" <lunstax[at]belllsouth.net> wrote:
- quote -

Wouldn't it be a gift to some extent as soon as it is
deposited into a JOINT account under the constructive
receipt doctrine?

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

- quote -

Wouldn't that depend on how it's spent? For instance, if
the second person withdraws the money to make a payment on
behalf of the first, there's no element of gift involved.
(E.g. The first person is travelling or otherwise
unavailable for a while, so sets up a joint account for the
second person to pay bills for her.)

I don't know the gift tax situation if the second person
withdraws money to buy a gift for the first.

Seth

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Bernard Cosell <bernie[at]rev.net> wrote:

- quote -

I would say that, depending on what it's spent for, it might
be a gift.

Seth

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Bernard Cosell wrote:

- quote -

Why do you think that there are ANY tax implications to your
scenario? What is being laundered?

If you were foolish enough to open a joint account with
someone not your spouse or minor child, then don't compain
about the other party making withdrawals without your
knowledge.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Bernard Cosell wrote:

- quote -

It could necessitate the filing of a gift tax return, if the
amount of the withdrawals exceeds $11,000 (or whatever is
the allowable amount for the year/s in question).

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Bernard Cosell wrote:

- quote -

It becomes a completed gift at the time the non-contributor
withdraws it (barring a loan agreement or similar to the
contrary, of course). That's true for a married couple as
well, but there's no gift tax on transfers between married
couples, regardless of filing status.

Given more details, I might be able to come up with a better
answer, but the standard "Mom puts money into account, child
takes it out and fritters it away" scenario, it's a
(potentially reportable, potentially taxable) gift at the
time of withdrawal.

Phoebe

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"Bernard Cosell" <bernie[at]rev.net> wrote:

- quote -

No income tax implications, but the person putting the funds
into the account might have to file a gift tax return if the
amount withdrawn by the other owner exceeds $11,000 in a
year.

--
Tom Healy, CPA
Boulder, CO
Web: http://www.tomhealycpa.com

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Bernard Cosell wrote:

- quote -

Simple. that second event, the withdrawing of funds, is a
gift, and therefore not income taxable.

ChEAr$,
Harlan Lunsford, EA n LA

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Bernard Cosell <bernie[at]rev.net> wrote:

- quote -

I'd think it would depend both on the source and use of the
funds. In general, though, there shouldn't be any income tax
implications. The only issue would be whether there may have
been taxable gifts from a gift tax standpoint.

Stu

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"Bernard Cosell" <bernie[at]rev.net> wrote:

- quote -

The purpose of money laundering is to put obfiscate the source
unreported cash and enter the cash into the banking system.
Most often no taxes are paid.

Example: Drug dealer wants to purchase a $40,000 car. So he
finds a business that makes large cash deposits on a daily
basis. He gives the cash to the business; the business puts
it into the bank and then transfers it to a second account
on which the drug dealer has signatory authority. The drug
dealer can now write checks against the account.

The tax ramifications are that drug dealer owes taxes on the
money. The criminal ramification is both are charged with
money laundering under RICO.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"Bernard Cosell" <bernie[at]rev.net> wrote:

- quote -

The same way it would if they skipped the joint account and
party one just gave the money to party two. There's no tax
effect.

--
Phil Marti
Clarksburg, MD

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

I was wondering about the tax-implications of moving money
through a joint checking account for two people *NOT*
"married filing jointly". If one of the parties deposits
funds [on which taxes were properly paid, of course] into
the account and the other party withdraws it, how is the tax
on that sorted out.

/Bernie\

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->