- quote -

No. He _sold_ you the property for $13K, because you were
obligated to pay that much to him. His gift to you was $14K
in value, which is your capital gain.

(It would have been much better for him to sell it and give
you the after-tax money; less capital gain taxes, less gift
taxes/lifetime exemption usage. That's why it pays to
discuss the issue in advance of doing anything.)

Seth

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"Art" <yardline[at]hotmail.com> wrote:

- quote -

Your father has to file a gift tax return, and on $14,000.
Aside from that, you've got it.

Stu

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Art wrote:

- quote -

Except for the last part. It's your dad who is responsible
for the gift tax return.

ChEAr$,
Harlan Lunsford, EA n LA

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There were several questions about why it was done this way.

The reason is: my Dad is weird.

He knew I needed a new roof on my house and volunteered to
help out. But rather than just giving me the money, he
quitclaimed the lot to me with the verbal understanding that
when I sold it I would give him 13k to cover what he had in
it.

So where does that leave me? I think Paul A. Thomas has it
the closest, that I report the sale at $27,000 and my basis
at $13,000. And I also have to file a gift tax return on the
13k. Would that be the consensus?

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"Art" <yardline[at]hotmail.com> wrote

- quote -

You will report the sale at $27,000 and your basis at
$13,000.

Unless you had an agreement to repay your dad his $13k, you
might have to file a gift tax return.

--
Paul A. Thomas, CPA
Athens, Georgia
paulthomascpapc[at]bellsouth.net

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Art wrote:

- quote -

Assuming that 13,000$ is his real cost basis of the land,
and assuming you netted 27,000$ after closing costs, you
have a short term gain of 14,000 on which you will pay tax.

For you see, your cost is his cost.

ChEAr$,
Harlan Lunsford, EA n LA

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"Art" <yardline[at]hotmail.com> wrote:

- quote -

Art,

Sounds to me like you have a $14,000 long term capital gain
to report.

Rgs,

Mark

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- quote -

Interesting. I don't see any mention of the word "gift" in
the question - only in the subject line. Using a quitclaim
deed instead of a warranty deed does not make it a gift!
What was the intention when the deed was transferred?

If it were a gift, your basis would be his basis ($13K), and
you would have a $14K long term gain. At first blush, you
and he would also have the obligation to file gift tax
returns for your mutual gifts. But the fact that you said
you gave him the $13K to "cover his original cost" makes it
sound like at least the final payment was not a gift.

I suspect that the original transaction was not a gift, but
a sale with a delayed payment, and you have a $14K short
term gain. Unless someone else comes up with a scenario
where you were acting as his agent and he has the $14K long
term gain.

--
Don EA in Upstate NY

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"Art" <yardline[at]hotmail.com> wrote:

- quote -

Well, it depends on why all this happened.

Scenario 1: You both were overwhelmed with spontaneous
generosity. Outcome:

You have a $14,000 capital gain to report on your 2005 1040,
Schedule D. Your "purchase" date is the date your father
purchased the property.

Your father has a 2005 gift tax return to file for the
$27,000 gift to you. You also have a taxable gift to your
father for the $13,000 and will need to file a 2005 gift tax
return.

Scenario 2: You cooked up this routine to avoid the capital
gain on your father's return. Outcome:

You were your father's nominee in the sale of the land. You
file a 1099-S transferring the proceeds to him. He reports
the sale on his 2005 1040, Schedule D.

Your father has a gift tax return to file for the $14,000
gift he made to you.

--
Phil Marti
Clarksburg, MD

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"Art" <yardline[at]hotmail.com> wrote:

- quote -

You bought it for $13,000 and sold it for $27,000, giving
you a $14,000 taxable capital gain.

At the same time your father sold you a $27,000 piece of
property for $13,000, meaning that he gave you a gift
probably subject to gift tax.

Stu

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My Dad quitclaimed a deed for a piece if land to me in June
of 2005. In August I sold it for $27,000.00. Once I had the
proceeds, I then gave him $13,000.00 to cover his original
costs for the land. There was never any documentation of
this monetary transaction between us. How should this be
handled tax wise?

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