Gifting money from a parent to son or daughter

[Zigner]

True, but I did make it clear in one of my previous responses that I was responding on a moral basis.

Fair enough - yes you did.

 

[curb1]

I agree with all of you. The reason they wanted to have Dad pay rent was so they could take the deductions for taxes.

 

[davew128]

I agree with all of you. The reason they wanted to have Dad pay rent was so they could take the deductions for taxes.

If he's not paying fair market value rent, then no deduction is going to be allowed.

 

[curb1]

Their reasoning was that the Dad could rent and then the son could take the write-off for taxes. The Dad was completely fine with this and was in on the decision. There is no moral issue. The interesting and big deal that I found out was the father of the Dad had set up a trust and instead of him being the owner he set it up (in the beginning) with the children being the owners of the trust. Now the grandfather and grandmother have died and the farm has appreciated to $2.2 million. The big problem is that when any one of the seven children want to "cash out" of the trust there is about a $100,000 tax bill. Whereas if the grandfather would have had the Trust in his name the stepped up basis would have eliminated the capital gains and alternative minimum tax.

 

[tranquility]

Their reasoning was that the Dad could rent and then the son could take the write-off for taxes. The Dad was completely fine with this and was in on the decision. There is no moral issue. The interesting and big deal that I found out was the father of the Dad had set up a trust and instead of him being the owner he set it up (in the beginning) with the children being the owners of the trust. Now the grandfather and grandmother have died and the farm has appreciated to $2.2 million. The big problem is that when any one of the seven children want to "cash out" of the trust there is about a $100,000 tax bill. Whereas if the grandfather would have had the Trust in his name the stepped up basis would have eliminated the capital gains and alternative minimum tax.

Write off, sure. Depreciation too. But, there will be income related. I would need to see EXACTLY your plan to know the reporting. It is unlikely you will gain huge benefits in taxation because of a gift. Just saying.

As to the rest, that is a lot of things to consider. I think of how to report things. Let's face it, you have many goals and many possible paths. I know you don't get to do one thing and argue others. I also know that many things can be worked out, but, they are worked out and what flows from them is set.

Uncertain maybe is not the way to do things. While the potential to be caught is less than one might imagine, the IRS is getting WAY better. You better be right, you better be able to pay the penalties and interest if wrong.

See a good tax guy. This is not crazy stuff. This is basic planning. But, the basic planning needs a knowledgeable expert, a fair set of goals and a good sense of all the facts to make a determination.

See the guy.