View Full Version : Gift Tax?
My mom inherited, among other things, a truck when her dad passed away last year. She didn't want it so she gave it to me. It was only a year old or so, so it's not a hunk of junk so I figured somebody would be owing taxes somewhere. I assumed that she would since she gave it to me but her tax lady says "no, don't worry about it". :confused:
Is that not taxable? I think I've asked this before but now I'm asking again. :)
sanantoniosooner
2/11/2006, 11:14 AM
I've got my eye on this thread with an itchy 1 star trigger finger.
I've got my eye on this thread with an itchy 1 star trigger finger.
I've got my fingers crossed.
sanantoniosooner
2/11/2006, 11:16 AM
I've got my fingers crossed.
that did it.:D
So I guess all the cool accountants around here are curled up in bed with hot chicks again, huh?
Bwahahahahaha......good one. :)
Hamhock
2/11/2006, 11:46 AM
A person can give another person up to $12,000 without "gift tax" implications. However, the term gift tax is misunderstood. Neither the giver or the givee pays any tax at time of gift. It all goes in to the calculation of the estate tax for the giver. That said, if you give in excess of $12,000 to someone in a year, a gift tax return (no tax due, just reporting) should be filed. How much is the truck worth?
OUHOMER
2/11/2006, 11:52 AM
seem like when you change the title over u will be paying excise tax on that. wont a gift tax be like paying a doubke tax.. But i guess the gov would love it
A person can give another person up to $12,000 without "gift tax" implications. However, the term gift tax is misunderstood. Neither the giver or the givee pays any tax at time of gift. It all goes in to the calculation of the estate tax for the giver. That said, if you give in excess of $12,000 to someone in a year, a gift tax return (no tax due, just reporting) should be filed. How much is the truck worth?
According to KBB, the private party value of it is around $20k. So my mom would need to file this "gift tax return" ?
seem like when you change the title over u will be paying excise tax on that. wont a gift tax be like paying a doubke tax.. But i guess the gov would love it
If I remember correctly, there is no excise tax due when the transfer of ownership is between parent/child.
oumartin
2/11/2006, 05:34 PM
dont' worry about it..
dont' worry about it..
You're not a tax geek!
:)
BudSooner
2/11/2006, 07:00 PM
If I remember correctly, there is no excise tax due when the transfer of ownership is between parent/child.
You are correct sir, at least that was the case 6yr ago.
I don't think it's changed.
yermom
2/11/2006, 07:21 PM
can't you just buy it for $1 or something?
Sooner_Bob
2/11/2006, 07:34 PM
can't you just buy it for $1 or something?
Wouldn't the excise tax on a buck still be like $20? :P
Hamhock
2/11/2006, 07:40 PM
According to KBB, the private party value of it is around $20k. So my mom would need to file this "gift tax return" ?
Are you married? If so, your mom could "gift split". She can give the truck to both you and your wife, making the gift only $10k each.
Are you married? If so, your mom could "gift split". She can give the truck to both you and your wife, making the gift only $10k each.
No, not married.
So do I need to indicate this anywhere on my return? I didn't notice any questions in TurboTax where it might ought to go.
yermom
2/11/2006, 07:41 PM
Are you married? If so, your mom could "gift split". She can give the truck to both you and your wife, making the gift only $10k each.
that's the best argument for marriage i've heard
Hamhock
2/11/2006, 07:43 PM
No, not married.
So do I need to indicate this anywhere on my return? I didn't notice any questions in TurboTax where it might ought to go.
Is your dad still around? He could split the gift with your mom...same affect.
Is your dad still around? He could split the gift with your mom...same affect.
Nope, he's deceased.....and they were divorced long ago.
Stanley1
2/11/2006, 07:45 PM
So I guess all the cool accountants around here are curled up in bed with hot chicks again, huh?
Bwahahahahaha......good one. :)
Pretty much.
And taxes aren't "my thing". You ever have an audit question, you know where to find me. :texan:
And taxes aren't "my thing". You ever have an audit question, you know where to find me. :texan:
Depending on how this "gift tax" thing goes......that could be the case.
:D
Hamhock
2/11/2006, 07:48 PM
Depending on how this "gift tax" thing goes......that could be the case.
:D
Is your mom hawt?
Is your mom hawt?
I'm 36 years old.......does that make a difference to you?
:D
Hamhock
2/11/2006, 07:50 PM
Nope, he's deceased.....and they were divorced long ago.
Here's what you do. You buy the truck from your mom for $20,000. Sign a promissory note, with interest, the whole nine yards. Make the term 24 months. You make no payments.
She forgives $12,000 of the note in year 1 and the rest (with interest) in year 2.
This way, she doesn't gift you any more than $12,000 in any one calendar year.
That sounds like a lot of work.
I was hoping to go with the 'don't mention it and hope nobody notices' route.
Hamhock
2/11/2006, 07:55 PM
That sounds like a lot of work.
I was hoping to go with the 'don't mention it and hope nobody notices' route.
Don't mention it and hope nobody notices.
McAlester has great Italian food.
Seriously, this transaction has a very low risk factor for audit. Technically, they can hit you for failure to file a gift tax return. But, If you pay somebody for tax advice, this is what they'll tell you.
From the IRS site:
If you gave any one person gifts in 2005 that valued at more than $11,000, you must report the total gifts to the Internal Revenue Service and may have to pay tax on the gifts.
The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.
Gifts include money and property, including the use of property without expecting to receive something of equal value in return. If you sell something at less than its value or make an interest-free or reduced-interest loan, you may be making a gift.
Sounds like moms is liable, which is what I thought I figured out when I got the truck a few months ago. I guess her tax lady is retarded and she WILL have to report the gift. That's fine, I'm not trying to get out of the tax....I told my mom that I would pay her whatever the tax was. I'm just more worried that her tax preparer told her incorrectly.
RacerX
2/11/2006, 08:02 PM
Don't mention it and hope nobody notices.
McAlester has great Italian food.
Seriously, this transaction has a very low risk factor for audit. Technically, they can hit you for failure to file a gift tax return. But, If you pay somebody for tax advice, this is what they'll tell you.
It'd be federal time.
RacerX
2/11/2006, 08:03 PM
Double taxation, gotta love it.
It'd be federal time.
Good point.
Maybe I was too quick to accept free tax advice on the innernets from someone named Hamhock. :O
;)
Double taxation, gotta love it.
How so?
oumartin
2/11/2006, 08:05 PM
nobody ever goes to jail for failing to file taxes.. You'll just owe penalties and back taxes.
Don't sweat it.
They're too busy auditing the middle class. You make way to much for them to worry about you. They expect it.
RacerX
2/11/2006, 08:06 PM
Taxes were paid on the truck when it was bought.
Now someone is paying taxes to give the truck away.
Possibly there were inheritance taxes involved as well.
Hamhock
2/11/2006, 08:12 PM
Good point.
Maybe I was too quick to accept free tax advice on the innernets from someone named Hamhock. :O
;)
No tax is due. It is only an informational return. The Man wants to keep track of who is giving away more than the annual exclusion ($12,000) to try and escape estate taxes.
Would you feel better if I changed my name to TaxHamhock or Hamhock, CPA?
Hamhock
2/11/2006, 08:14 PM
[QUOTE=oumartin]nobody ever goes to jail for failing to file taxes.. QUOTE]
Uhm....really? I'd like you to tell that to a few people wearing orange jumpsuits.
So this $11k figure for gifts......what if you're wealthy? If you buy your children or siblings or whatever the case may be, pretty lavish gifts for say...Christmas, would you have to keep track of everything for gift tax purposes?
Obviously, this scenario would be for the very wealthy but still......sounds like a huge pain in the ***.
Would you feel better if I changed my name to TaxHamhock or Hamhock, CPA?
Would you mind? :D
Okay, I just wanted to find the answer to this question for MY half of the equation so I could go ahead and file my taxes. I'll have to let moms know she needs to go somewhere else on account of her lady sucks.
oumartin
2/11/2006, 08:18 PM
oh, so maybe some do.
Penguin
2/11/2006, 08:20 PM
Get ready for Federal Pound-You-In-The-*** Prison.
Hamhock
2/11/2006, 08:28 PM
So this $11k figure for gifts......what if you're wealthy? If you buy your children or siblings or whatever the case may be, pretty lavish gifts for say...Christmas, would you have to keep track of everything for gift tax purposes?
Obviously, this scenario would be for the very wealthy but still......sounds like a huge pain in the ***.
Yep. You have to keep track and report any gift if you give any individual over $12k per year. It is a huge pain in the ***.
From reading Publication 950, it sounds like the amount the vehicle is worth over $11k is taxable but you can apply the unified credit to that tax amount and will owe nothing. However, a gift tax return will have to be filled out showing this.
That's what I figger.
Since mom is over the limit for the year, I guess she'd better include the clothes she got me for Christmas and the golf shoes for my birthday. Oh, and the ball mark repair tool.
:rolleyes:
oumartin
2/11/2006, 08:49 PM
dang, you still get gifts from your mom? LUCKY
i think the last gift I got from my mom was a toshiba boom box in 1988.
Yup....for Christmas and birthday.
SicEmBaylor
2/11/2006, 08:59 PM
Can you go out with a hammer and put enough dents in the truck to lower its value under $12,000?
Hamhock
2/11/2006, 09:22 PM
From reading Publication 950, it sounds like the amount the vehicle is worth over $11k is taxable but you can apply the unified credit to that tax amount and will owe nothing. However, a gift tax return will have to be filled out showing this.
That's what I figger.
Pretty sure the $11k changed to $12k for '06.
And you are correct. You should have just started with the Pub...you didn't even need me. :(
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