Reciprocal gifts?

[Unregistered]

I haven't heard this one before:

Client says he "gave" his son a house (vacation home, not principal residence) and asked for nothing in return. Son would not accept the gift and paid dad $50,000. Dad cashed the check--so I'm thinking it's no longer a gift.

They are claiming that the house was originally gifted to the son. Then the son gifted $50K to dad. I told them it's a sale w/ 15% capital gain (I don't know the basis, but have the impression it's below $50K).

Probably won't hear from the client again, but any thoughts?

[Possi]

gift tax

I don't know much about gift taxes, but they surely would be in the picture for such a "gift."
I totally agree that it goes on the Sch D.
Someone with much more expertise will chime in soon!
~poss

[Chief]

Reciprocal Gift

Something does not sound right here. Pray that this client does not return. Sounds like trouble to me.

[cpadan]

Gift in excess of consideration

I just had a similar situaiion, it is not a gift except for the difference between value of gift given and gift (consideration) received.
Dan

[Bees Knees]

If the Dad gifted the house to the Son, and the Son gifted the cash to the Dad, tell the Son his cost basis has to be his Dad’s cost basis – probably far less than the $50,000 the Son paid…er…gifted back to Dad.

The Son will want his cost basis to be $50,000, I assume.

Its a sale….he says…..

Problem solved.