Announcement

Collapse
No announcement yet.

Loan Upon Death

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Loan Upon Death

    Aging mother buys Land for $250,000 and immediately sells it to her two sons. Additionally, she finances the sale for a length most likely which will outstrip her life expectancy. She avoids gift tax by selling the land for the same $240,000 rather than giving to them and thus avoids not only gift tax but transfers the property without it being in her estate.

    She is, however, obligated to impute interest. She will collect interest as claim as income, and her sons will deduct as business interest. The two sons are land developers.

    If she dies prior to repayment of the loan (which is probable), how is the remaining principle treated for possible estate tax or income tax consequences? Is there any income with respect to decedent?

    #2
    The note is part of the estate so she didn't accomplish much of a reduction. There would be IRD only to the extent of accrued interest on the date of date. She did manage to avoid a DOD basis for the kids.

    Comment

    Working...
    X