Gifts Annual Exclusion

[geekgirldany]

Clients would like to give child and husband money for a house. Would range from $30,000 to $40,000.
He has already given $10,000 each to both this year

I thought about the gift splitting but would like to avoid a gift tax return if possible.

What about giving gifts to minor grand children? It appears that this would not work as the money would have to put into a custodial account and could not be used for the purchase of a house.

The only other thing I can think of is gifting some of the money to my Client's other child and that child turn around and giving it to first child.
Would that work?

Again, I do not mind doing the gift tax return and the client doesn't either. Just trying to figure a way of not having to do one if possible.

[Golden Rocket]

Possible $56,000 exclusion

Are all parties married? If so, father and mother may give daughter $14,000 apiece. And then give her husband $14,000 apiece during the same year.

Total is $56,000. Possible downside is they have created joint ownership of the house between son and an in-law. That may be a downside for some people.

Stay away from grandchildren if you can. Ownership may get unnecessarily snarled otherwise.

[geekgirldany]

Yes, they are all married.
Okay, so Client's Husband and Wife.. Husband gives Son $14,000, Husband gives Son Wife $14,000. Wife gives Son $14,000, Wife gives Son Wife $14,000.
Each of them doing it this way should avoid gift splitting and should avoid doing a Gift Tax Return. Correct?

You wrote "Possible downside is they have created joint ownership of the house between son and an in-law."
Are you talking about joint ownership between son/wife and father/mother?

[Lion]

Son and daughter-in-law (or is it daughter and son-in-law?) will each be contributing half for the down payment. That may or may not be their intent or the intent of the parents.

Also, don't forget to subtract out the $20,000 the parents have already given their child and spouse this year, plus any and all other gifts for birthdays, holidays, etc.

They could always aim for a really, really long escrow so parents can give more 1 January 2015 !!

[New York Enrolled Agent]

Clients would like to give child and husband money for a house. Would range from $30,000 to $40,000.
He has already given $10,000 each to both this year

I thought about the gift splitting but would like to avoid a gift tax return if possible.

What about giving gifts to minor grand children? It appears that this would not work as the money would have to put into a custodial account and could not be used for the purchase of a house.

The only other thing I can think of is gifting some of the money to my Client's other child and that child turn around and giving it to first child.
Would that work?

Again, I do not mind doing the gift tax return and the client doesn't either. Just trying to figure a way of not having to do one if possible.

I'm perplexed by your last sentence. What's the big deal - parent(s) give the money, parent(s) file the 709(s) - nothing to worry about.

Your idea of giving to the other child is a bad one - you would be engaging in a step transaction - substance would prevail over form. Do the 709!!!

[TaxGuyBill]

Yes, they are all married.
Okay, so Client's Husband and Wife.. Husband gives Son $14,000, Husband gives Son Wife $14,000. Wife gives Son $14,000, Wife gives Son Wife $14,000.
Each of them doing it this way should avoid gift splitting and should avoid doing a Gift Tax Return. Correct?

Yes.


If they still want to give more, either file the Gift Tax return or they can give more in 2015.

[geekgirldany]

I'm perplexed by your last sentence. What's the big deal - parent(s) give the money, parent(s) file the 709(s) - nothing to worry about.

Your idea of giving to the other child is a bad one - you would be engaging in a step transaction - substance would prevail over form. Do the 709!!!

Client mentioned about giving to the other child. I was unsure about it.

I think that any preparer would try to find out all they can about a given situation if it would avoid having to prepare a possible unnecessary gift tax return.
As such asking my questions I was only trying to understand exactly what my clients were allowed to give to the child/wife.

There is no big deal about doing the gift tax return. As I said I do not mind preparing it and they do not either. But I do not want to prepare one if it is not necessary.

Thank you to those who posted your help is very much appreciated.

[geekgirldany]

Son and daughter-in-law (or is it daughter and son-in-law?) will each be contributing half for the down payment. That may or may not be their intent or the intent of the parents.

Thank you for explaining that. I had not taken that into consideration and I will tell my clients to think about that before giving the money.

[Burke]

They can always make it (or a part of it) a loan, legitimately, with interest and a signed promissory note, and periodically forgive the principal.

[TaxGuyBill]

Burke, that's a fantastic idea.