Arthur Kamlet <ArtKamlet[at]aol.REMOVE.com> wrote:

- quote -

Not likely, I think: why did it happen?

Under some circumstances, maybe. E.g. Older sib gives
younger sib a gift to help him pay loans, buy a house, etc.
A couple of weeks later, younger sib gets a bonus, so he
returns the gift.

Seth

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kamlet[at]panix.com (Arthur Kamlet) wrote:
- quote -

Even if it's "legitimate" the IRS may employ what they call
the "step transaction doctrine." It says that if something
was done in small, non-taxable steps that, if done all at
once would have been taxable, they'll treat it as if it had
all been done at once. And the courts agree with the IRS on
this.

Stu

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"joetaxpayer" <joetaxpayer[at]nospam.com> wrote:

- quote -

Before the return is filed it's a simple nominee situation,
and the gain winds up on the original owner's return. If
they actually file returns reflecting this scheme it
straddles nothing. It's fraud. There never was a gift.

--
Phil Marti
Clarksburg, MD

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joetaxpayer <joetaxpayer[at]nospam.com> wrote:

- quote -

If this arrangement is made at the start, it is a sham
transaction and could be called fraud.

If there is no such arrangement in advance, but younger sib
just hapopens, without being prompted, to make a free will
offering to older sib, that might actually work. If
younger sib is not an adult in your state, forget it.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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Client has shares of stock which have appreciated 4x in 6
months and he'd like to take some gains. Is there anything
not legal with him gifting $24000 to a (much lower income)
sibling, and shortly after the sibling sells, have the cash
gifted back? Client is in 36% bracket, sibling would pay
10/15%. To me, this straddles the line between legal 'tax
avoidance' and 'tax evasion'. Just want to confirm whether
or not this would pass an audit.

Client understands the risk that sibling can take the money
and run, but that's not a concern. (note, client is married,
that's how the $24,000 is the number in question).

JOE

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