In article <23f45d00-75fc-4250-9798-c02497f10131[at]d19g2000prm.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
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Lend the parent the rest.

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The other way around, I think.

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That's what I suggested, except that I suggested using actual
transactions instead of forgiving. If the lender just forgives $24K
each year, it can look like one large gift. By having actual payments
made, it's clear that it's one loan and several gifts.

- quote -

There's nothing to ask if there's no forgiveness.

Seth

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

Of course. There's nothing wrong with doing that. The problem comes
when the gift is really made in one year and spreading it out is only a
formality. When the donor has a check in hand, the decision as to
whether to make the forgiveness/gift really only happens at that time.
I've done this kind of thing for clients, and have never had a problem.

Stu

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On May 15, 11:56 am, se...[at]panix.com (Seth) wrote:

- quote -

But the original problem was to give more than the maximum exemption
amount to the parent, such as 50k when the maximum was 24k. The
strategy to set up a loan from parent to child, and for the child to
forgive the loan, even if the child has a check in hand (and if the
money is in the parent's account), and to do this every year, still
seems like a way to skirt the onerous gift tax. At least an IRS agent
might ask you to prove that this is a valid loan, and why is it being
forgiven each year, etc.

--
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Harlan Lunsford <hnslunsford[at]bellsouth.net> wrote:
- quote -

I believe that's the case in most situations. Because it's not really
splitting a gift. It's each spouse giving exactly half even if it's in
one check.

Of course it's not necessarily the court in every instance. If all the
money in the bank account is in the name of just one spouse and it was
acquired by inheritance, it would be all his funds so a gift split
would be required to avoid incurring gift tax.

Stu

--
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Stuart Bronstein wrote:
- quote -

the daughter, the requirement to file 709 for gift splitting purposes
does not apply?

Harlan

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

rdadams[at]panix.com (Dick Adams) wrote in news:g0g6om$gdi$1
[at]reader2.panix.com:

- quote -

Late father was very enthousiastic about his cataract surgery. All those
colors!

I'll be facing it some time too, so please keep us updated, but don't
strain those eyes, and don't bend over!

--
Best regards
Han
email address is invalid

--
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Harlan Lunsford <hnslunsford[at]bellsouth.net> wrote:
- quote -

I was thinking of community property. In community property states any
gift normally comes from both spouses equally, even if it's in one
check. There is no gift to split since each is making a gift of his or
her own funds in an amount within the annual exclusion amount.

Stu

--
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Stuart Bronstein wrote:
- quote -


IF each gave 12000 separate, you'r eright.

But chances are that only one check was written, thus the gift tax
return must be filed to affirm the joint gift and that the other spouse
assents thereto.

ChEAr$,
Harlan

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <4d709b2e-e3a9-4999-a9fa-da3c967481e9[at]w4g2000prd.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:

- quote -

A check without funds behind it is always a bad idea.

In that situation, I'd advise the child to give the parent $12,000 (or
$24,000 or $48,000 as appropriate) first. After the child's gift
clears, the parent can pay the loan with a valid check that gets
cashed.

Seth

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On May 14, 4:01 pm, Stuart Bronstein <spamt...[at]lexregia.com> wrote:

- quote -

"but the donor forgives the payment after the check is in his hand" --
to me that sounds like the same thing as automatic forgiveness of the
loan. In the OP's scenario (which might actually turn out to be a
take home final) the parent, who is poor and writing the check, could
write a check to the kids knowing that they will write void on it and
not cash it, and the purpose of writing a check is just to make it
look formal and kosher, and they might not even have the money in
their bank account anyway, and if so then it is a way to fool the IRS.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

<baybinthuhwoulds[at]isp.net> wrote:

Would be very grateful for some informed opininons/pointers
- quote -

This has been a difficult day. First, Cataract surgery
at 7:30am. It's bad enought that I am not allowed to
smoke cigars for a week, but this no alcohol for two days
sucks. Everyone knows pain killers don't work without
alcohol And then it takes reading a few paragraphs of
the above post before I realize it reads like a take-home
final for a graduate Tax/Financial Planning course.

If it is a take-home final, it's a more malacious question
than I would have ever conjured up.

Dick

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"removeps-groups[at]yahoo.com" <removeps-groups[at]yahoo.com> wrote:

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It depends. If each gives exactly $12,000, then no. But if one
gives more of his personal property and the other gives less of hers,
then a return is required.

- quote -

Basically yes. But until 2010 the estate tax exemption is greater
than the gift tax exemption. So the initial gift tax marginal
bracket will be lower (because it involves less money) than the
estate tax marginal bracket.

- quote -

Either that or included in the donor's income imputed income gifted
to the donee.

- quote -

If it's set up so that the forgiveness is done every years
automatically, then that could well happen. If the kids actually
send a check but the donor forgives the payment after the check is in
his hand, that would likely not be seen as a pretext.

Stu

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On May 14, 2:49*pm, joetaxpayer <joetaxpa...[at]nospam.com> wrote:

- quote -

Is a gift tax return still required if both husband and wife give 24k
to one person? It's just to record the gift splitting (that both
husband and wife consent to give the gift), but there is no gift tax.

What are the gift tax rates? Are they the same as the estate tax
rates at http://www.irs.gov/formspubs/article...max_rate_2006?
That is, 35% on amounts over 10450? I read somewhere about a 45%
rate.

Forgiven interest has to be included as income in the forgiven
person's tax return taxed at that person's tax rate (maybe 15% here).
But if the IRS thinks that the loan setup is an attempt to avoid the
gift tax, they may recharacterize the forgiven interest as a gift, and
subject the giver to a gift tax on it, and mabe some penalties too.

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

- quote -

Yes, what he said.
So you can gift $24K/yr with no issue in addition to the medical bills.
Are you married? If so, you are up to $48K as spouse can gift as well.
If not, you should be filing gift returns for the difference. You can
also contrive a loan using their home as collateral, and forgive $24K
worth of interest/yr. If you are high income, that extra effort may not
be worth it. Just file the gift return.
Joe

www.blog.joetaxpayer.com

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On May 14, 10:37*am, baybinthuhwou...[at]isp.net wrote:

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Quite a long post. Is the child supporting the parent?

- quote -

They're not. Some people try to set up a corporation or sole
proprietorship and write off the amounts they want to give (such as
50k) in your case, as an expense such as salary. The amount would be
taxable to the recipient but the tax would be small, whereas the tax
savings to the giver is large. However, unless this is a real
business and there is real work, it is tax fraud.

The annual gift exclusion is 12k, not 11k. Amounts paid for medical
expenses for your qualifying parent don't count towards the 12k annual
limit. I'm not sure if the payments must be made directly to the
medical institution, but it's probably a good idea to do this. These
are deductible on the child's return, subject to the 7.5% limit.

http://www.irs.gov/publications/p502/ar02.html#d0e356

But talk to a pro to go over all your details and to get a good
strategy.

--
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"Phil Marti" <prm20871[at]verizon.net> wrote:
- quote -

Yeah, I got to the second paragraph that said she has "substantial
yearly income" and didn't feel like reading the rest of a long, complex
post.

Stu

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<baybinthuhwoulds[at]isp.net> wrote:

- quote -

I, for one, would be grateful if someone could explain to me why someone
with substantial assets and current earning ability would be wasting time
trying to get free advice on such complicated intertwined issues rather than
just plopping the whole thing in the laps of some very well-paid advisors
and getting on about peddling her mousetrap or, better yet, offering her
parents equivalent time in just being with them.

Citations not necessary.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Would be very grateful for some informed opininons/pointers about what
are probable estate tax planning and also income tax
implications/solutions - and, preferably, cites to sources - that
address the following:

---------------
FACT ASSUMPTIONS:

- quote -

die until sometime long after 2011;
- quote -

substantially above levels in effect in 2002 but not eliminate all
estate tax and will maintain the yearly $11,000 gift tax exclusion at
or close to that sum;
- quote -

"cap"/levels may be - that is, will have a taxable estate - and will
be survived by several presently young children and a legally married
husband who she intends will be in some combination (perhaps not
relevant here to discuss) the sole beneficiaries of her estate.

---------------

SCENARIO/QUESTIONS:

The high-income taxpayer's mother - who has only recently become
eligible for Medicare, is not eligible for SSI or SSD benefits, and
who, because of recent years of non-employment, will be receiving only
a comparatively very small amount of social security - is very
seriously debilitated and disabled by a severe combination of physical
and mental illnesses which require rehabilitative therapy and
caretaking expenses that probably will be needed over a period of
years and which this year alone have included non-insured hospitable
bills of more than $10,000 and (residential and rehabilitative)
nursing home care exceeding $20,000 which the taxpayer has paid on her
parent's behalf.

The parent, who presumptively will have a comparatively long life
span despite her debilitated medical condition, owns jointly with her
also unemployed and unemployable husband substantially less than $425K
in marketable securities plus a one-family residence owned jointly
with him, and has no source of income or ability to generate income
other than from recently and foreseeably decreasing interest earned on
the securities or, perhaps, from spending portions of that capital
plus borrowings as against the equity in the residence which, however,
if done, and if the other assets are spent down, would leave whichever
survives of the spouses without assets or (but for the questions posed
here) income.

The daughter/taxpayer, who does not presently have a contractual
or other law imposed obligation financially to support her mother, has
reason to believe that she will continue to be able and is willing to
pay for her mother's needed in-home or even nursing home care not
covered by Medicare and, in addition, also to provide an income to the
parent in the +/- $50K annual range - considerations which, however,
raise at least these questions (plus any others that informed folk
here may suggest) -

If the funds supplied to or on behalf of the parent constitute
more than fifty percent of her mother's support/maintenance, to what
if any extent are they deductible from the taxpayer's income taxes?

If the funds supplied to or on behalf of the parent constitute
more than fifty percent of her mother's support/maintenance and are
not presently deductible from the taxpayer's income taxes, what if
anything lawfully can be done to achieve such deductibility?

Bearing that the taxpayer already this year has expended on behalf
of her mother and mother's husband more than $22,000, although she had
not given each $11,000 directly, how if at all can the taxpayer
lawfully avoid having the IRS later claim that payments to the parent
or to third-party health care providers, etc., on the parent's behalf
are not gifts that eat into the Unified Tax Credit (thus, if such a
claim were to be made, interfering with what the taxpayer would like
eventually to leave to her young children and spouse) - or is this a
moot question and, if so, why?

Thanks very much!

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >