Taxpayer's parents passed away last year. All their assets were transferred into a trust according to their will. Now one of the properties is transferred out of the trust to the taxpayer with a quitclaim deed. Does the trust need to file a gift tax return because of it?
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From the instructions to Form 709
"Only individuals are required to file gift tax returns. If a trust, estate, partnership, or corporation makes a gift, the individual beneficiaries, partners, or stockholders are considered donors and may be liable for the gift and GST taxes."
However, if the trust instrument authorizes the trust to do this, I would think it would be a distribution of assets to a beneficiary, and it would not be considered a gift at all.Evan Appelman, EA -
There is no trust instrument to authorize it.Originally posted by appelman View Post
So, based on the instruction, I take it to mean that the taxpayer (gift recipient) has to file a gift tax return. Have I read it correctly?Comment
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No. He can't file a gift tax return for a gift from himself to himself.Originally posted by NotEasy View Post
How many beneficiaries are there? And what is the justification for the transfer?
I'm no expert, but here's an example where I think a gift tax return might be required: Parents leave house and other assets in a trust for the benefit of a son and daughter, 50/50. At some point, the trust transfers the house to the son, with no compensation to the daughter to offset it. Half of the house was already the son's, via his share of the trust. The other half was the daughter's. By putting the entire house into the son's name, with nothing to offset it, this constitutes a gift by the daughter to her brother of her half interest in the house - and she would be required to file a gift tax return.Comment
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The will is the trust instrument.
If there is no other document. What does it say?Evan Appelman, EAComment
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