removeps-groups[at]yahoo.com wrote:
- quote -

citation 465 US 330 and click Get It.

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On Jan 22, 2:46*pm, Alan <sfcnm-...[at]yahoo.com> wrote:

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What is the URL? All I could find was <http://www.ca8.uscourts.gov/
opndir/01/06/002171P.pdf> , and it does not have the word "interest-
free", or "Our laws require parents" in it.

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In article <h0ulj.137$Ch6.22[at]newssvr11.news.prodigy.net> ,
Alan <sfcnm-mtm[at]yahoo.com> wrote:

- quote -

Not going to jail (for violating the state court order) wasn't
considered adequate consideration?

Seth

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On Jan 22, 5:46*pm, Alan <sfcnm-...[at]yahoo.com> wrote:
- quote -

working it.
Indeed, even though you may be able to cliam an individual as a
dependant for income taxes, that does not mean that the money you use
to support them is not subject to gift tax. Anyone you are not
legally REQUIRED to support that you give financial support to is
considered a gift. So, you 19 year old child, any support is a gift.
Legally you can kick them out at 18. Tuition and medical are exempt,
but everything else counts.

Thank you very much to all who contributed here.

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Phil Marti wrote:
- quote -


This is the case where the 11th Circuit reversed the Tax Court
and ruled that intra-family interest free loans were taxable
gifts. The Supreme Court upheld the 11th. (BURGER, C. J.,
delivered the opinion of the Court, in which BRENNAN, WHITE,
MARSHALL, BLACKMUN, STEVENS, and O'CONNOR, JJ., joined. POWELL,
J., filed a dissenting opinion, in which REHNQUIST, J., joined.)

One of the arguments raised by Greene dealt with the contention
that imposing a gift tax on interest-free loans could result in
imposing the tax on routine neighborly or familial gifts, thus
intruding into cherished zones of privacy.

The court responded:

"Our laws require parents to provide their minor offspring with
the necessities and conveniences of life; questions under the tax
law often arise, however, when parents provide more than the
necessities, and in quantities significant enough to attract the
attention of the taxing authorities. Generally, the legal
obligation of support terminates when the offspring reach
majority. Nonetheless, it is not uncommon for parents to provide
their adult children with such things as the use of cars or
vacation cottages, simply on the basis of the family
relationship. We assume that the focus of the Internal Revenue
Service is not on such traditional familial matters. When the
Government levies a gift tax on routine neighborly or familial
gifts, there will be time enough to deal with such a case.

Moreover, the tax law provides liberally for gifts to both family
members and others; within the limits of the prescribed statutory
exemptions, even substantial gifts may be entirely tax free.
First, under Section 2503(e) of the Code, 26 U.S.C. Section
2503(e) (1982 ed.), amounts paid on behalf of an individual for
tuition at a qualified educational institution or for medical
care are not considered "transfer[s] of property by gift" for
purposes of the gift tax statutes. More significantly, Section
2503(b) of the Code provides an annual exclusion from the
computation of taxable gifts of $10,000 per year, per donee; this
provision allows a taxpayer to give up to $10,000 annually to
each of any number of persons, without incurring any gift tax
liability. /8/ The "split gift" provision of Code Section
2513(a), which effectively enables a husband and wife to give
each object of their bounty $20,000 per year without liability
for gift tax, further enhances the ability to transfer
significant amounts of money and property free of gift tax
consequences. /9/ Finally, should a taxpayer make gifts during
one year that exceed the Section 2503(b) annual gift tax
exclusion, no gift tax liability will result until the unified
credit of Code Section 2505 has been exhausted. /10/ These
generous exclusions, exceptions, and credits clearly absorb the
sorts of de minimis gifts petitioners envision and render
illusory the administrative problems that petitioners perceive in
their "parade of horribles.""

I know of no other case that has addressed this issue other
than a really really really old case in the Ninth Circuit. Comm'r
vs Greene (41 B.T.A. 515). A trustee of an estate of a woman that
had been declared incompetent had to provide support &
maintenance to the woman's older children (they were in their
40s) by state court order. The Ninth Circuit said that a gift was
a transfer for less than full and adequate consideration. They
found nothing in section 503 (this was the relevant section in
the Revenue Act of 1932) to imply that state law should be used
to define "consideration." They said that the gift tax reaches
all transfers where the consideration is not reducible to money
or money's worth. They also added that there was no requirement
for donative intent under section 503.

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"Bill" wrote:

- quote -

That specific example, along with the dependent's medical expenses paid
directly to the providers, doesn't affect gift tax as long as the tuition
payment was made directly to the institution. Both are specifically exempt
from gift tax.

--
Phil Marti
Clarksburg, MD

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prm20871[at]verizon.net (Phil*Marti) posted:

- quote -

Indeed, a seeming contradiction. However, if they're a dependent, how
can one limit the cost of such dependency?

Rephrasing, if you pay your dependent's tuition to some high-priced
colleges, you may incur an annual expense that exceeds the $12,000 limit
on that item alone -- and that ignores food, housing, etc.

At what point does an expense become a gift?

What? We should now start to look for logic in tax laws and
regulations? <g
Bill

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A discussion has been going on that went down all sorts of paths but has
never answered what I saw as the central question:

If one supports a person one is not required by law to support, is the money
spent on such support taxable for gift tax purposes?

Rephrasing, is it possible than you can wind up with a dependent on your
1040 and a tax liability on your 709 because of the money you spent on that
dependent?

--
Phil Marti
Clarksburg, MD

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