Gift & Dusclaimer

[boabab]

The Son received from his Parents gift = real estate. The Son received DEED.
After 2 months the Son made written notarized disclaimer for refusal to accept a gift.
The disclaimer was received by the Parents.
The DEED was transferred back to the Parents after 13 months of the date when the gift was made.

Is the Disclaimer Qualified disclaimer ??? Is the 13 months of the transfer of the DEED to the Parents problem for the Disclaimer to be qualified disclaimers?

All other requirement of the Law are met .

The Law:
Qualified disclaimers. A donee’s refusal to accept a gift is called a disclaimer.
If a person makes a qualified disclaimer with respect to any interest in property, the property will be treated as if it had never been transferred to that person. Accordingly, the disclaimant is not regarded as making a gift to the person who receives the property because of the qualified disclaimer.
Requirements. To be a qualified disclaimer, a refusal to accept an interest in property must meet the following conditions.
1. The refusal must be in writing.
2. The refusal must be received by the donor, the legal representative of the donor, the holder of the legal title to the property to which the interest relates, or the person in possession of the property within 9 months after the later of:
a. the day on which the transfer creating the interest is made or
b. the day on which the disclaimant reaches age 21.

3. The disclaimant must not have accepted the interest or any of its benefits.
4. As a result of the refusal, the interest must pass without any direction from the disclaimant to either:
a. the spouse of the decedent or
b. a person other than the disclaimant, and
5. The refusal must be irrevocable and unqualified.
The 9-month period for making the disclaimer generally is determined separately for each taxable transfer. For gifts, the period begins on the date the transfer is a completed transfer for gift tax purposes.

[New York Enrolled Agent]

The Son received from his Parents gift = real estate. The Son received DEED.

3. The disclaimant must not have accepted the interest or any of its benefits.
.

Others may disagree but it appears that once the son accepted the deed, he violated #3 and thus can not now claim a qualified disclaimer.

[BOB W]

Others may disagree but it appears that once the son accepted the deed, he violated #3 and thus can not now claim a qualified disclaimer.

Same here.................................... Although, I guess it is possible for the deed to be changed by the Parents and then not accepted by son. The parents could of procastinated while trying to convince son to keep deed. The 13 months may of been the parents problem.

The son may not have known about the transfer until 3 months after the deed change. Line 3 includes " or any of its benefits"????????????

[Corduroy Frog]

Form vs. Substance

What about the old "Form versus Substance" argument? which allows IRS to void a transaction for tax purposes (not necessarily for state title purposes)?

[Bees Knees]

#3 says the son must not have accepted the deed or any of its benefits. Nothing in the original post indicates the son accepted it or any of its benefits.

The original post is asking about the 13 months it took to un-do the deed. The 9 month rule says the refusal must be received within 9 months. The original poster said the son refused it after 2 months.

[BOB W]

Bees> As usual, you are right..............................!!!!!!!!!!!!!!! !!!!

One needs to read "atleast twice" before answering, something I didn't do here. As I was once told to me by my father-inlaw, "You have to first understand the question before you can begin to find the correct answer. Understanding the question is 75% of the solution".

[New York Enrolled Agent]

#3 says the son must not have accepted the deed or any of its benefits. Nothing in the original post indicates the son accepted it or any of its benefits.

The original post is asking about the 13 months it took to un-do the deed. The 9 month rule says the refusal must be received within 9 months. The original poster said the son refused it after 2 months.

NOTHING in the original post says the son accepted it???? The OP says the son received the deed. According to my Webster's New World Dictionary, the first definition of "accept" is "to receive".

So, the real question arises - Was the son's mere receiving (i.e. accepting) of the deed sufficient under the gift tax regulations to disqualify the use of a disclaimer? We really don't know but IMO the fact pattern in the original post leaves a feeling of some "game playing" here. If the son didn't want the gift, why receive (i.e. accept) it for two months and then refuse it? I think there is more to this story than we know. 13 months to get the deed changed back???? I suggest the OP get more details and check out the regs for disclaimers.

Under the regulations - Acceptance is manifested by an affirmative act which is consistent with ownership of the interest in property. ... However, merely taking delivery of an instrument of title, without more, does not constitute acceptance. If Bees wants to argue that there was not "acceptance" as articulated in the regs that's fine. But the son DID receive the deed and more facts are required before saying a definitive yes or no.

[boabab]

NOTHING in the original post says the son accepted it???? The OP says the son received the deed. According to my Webster's New World Dictionary, the first definition of "accept" is "to receive".

So, the real question arises - Was the son's mere receiving (i.e. accepting) of the deed sufficient under the gift tax regulations to disqualify the use of a disclaimer? We really don't know but IMO the fact pattern in the original post leaves a feeling of some "game playing" here. If the son didn't want the gift, why receive (i.e. accept) it for two months and then refuse it? I think there is more to this story than we know. 13 months to get the deed changed back???? I suggest the OP get more details and check out the regs for disclaimers.

Under the regulations - Acceptance is manifested by an affirmative act which is consistent with ownership of the interest in property. ... However, merely taking delivery of an instrument of title, without more, does not constitute acceptance. If Bees wants to argue that there was not "acceptance" as articulated in the regs that's fine. But the son DID receive the deed and more facts are required before saying a definitive yes or no.

Full Facts:
1. The property is foreign property.
2. The parents were in the foreign country when they made a gift to the son. The transfer of the DEED of the property was made by the parents and friend of the son who represent the son in the foreign country for all matters. The son did not know about the gift until parents return to USA (38 days after the transfer of the DEED) and immediately refuse to accept the gift signing the DISCLAIMER.
3. The gift from the parents to the son is CONDITIONAL. The condition is that the parents reserve the rights to use the property for free to the rest of their lifes. This condition under foreign LAW means that the son is named owner of the property, BUT the parents are USERS of the property AND the parents are responsible for paying real estate property tax AND only the parents have rights to rent the property AND only the parents will collect the rent AND only the parents are responsible for all taxes of the collected rents.
4. The son can not live in the property without permission of the USERS of the property = the Parents and the son have to pay rent if the parents decided to rent part or full property to the son. The only son’s rights is to sell the property BUT the CONDITION, that the parents reserve the rights to use the property for free to the rest of their lifes MUST exist in the new owner DEED. This mean the property is not SELLABLE. Obviously nobody will pay any think for something which can not be used until dead of both parents (and they can live 10-15-20 years). The son will receive any interest (full power) of the property after the dead of the both parents.
5. Why “13 months to get the deed changed back????” Under the foreign LAW to un-do a gift of the real property there MUST be court procedure. The procedure is at least 3 hearing and can last 2-3 or more years. It is not easy to un-do the gift if the parents and the son are in USA. Finally they gave up using court procedure to un-do the gift but made another gift from the son to the parents with explanation that this gif is actually return of the gift from the son to the parents

[Bees Knees]

#3 says the son must not have accepted the deed or any of its benefits. Nothing in the original post indicates the son accepted it or any of its benefits.

NOTHING in the original post says the son accepted it???? The OP says the son received the deed. According to my Webster's New World Dictionary, the first definition of "accept" is "to receive".

Full Facts:
2. The parents were in the foreign country when they made a gift to the son. The transfer of the DEED of the property was made by the parents and friend of the son who represent the son in the foreign country for all matters. The son did not know about the gift until parents return to USA (38 days after the transfer of the DEED) and immediately refuse to accept the gift signing the DISCLAIMER.

Only in tax law can someone receive something and 38 days later not accept it. I guess Webster better re-define some of its terms.

If my dad puts my name on the title to his house, and never tells me, did I receive title to his house? 10 years later he dies, still never telling me I own his house. 3 weeks after he dies, I finally discover I own his house as I was a joint tenant with right of survivorship.

When did I receive title to his house?

When did I accept his house as being my own?

Two different dates.

[New York Enrolled Agent]

Only in tax law can someone receive something and 38 days later not accept it. I guess Webster better re-define some of its terms.

Au contraire, Webster is doing great.

The OP has now explained that the son, in fact, did NOT truly receive the deed. Obviously, as per the gift tax regulations at §2518, the son did NOT manifest any affirmative action to accept the deed. The FACTS of the modified original post would indicate that #3 was not violated.