Is this a gift subject to tax?

[Sister-in-law]

What is the name of your state? Iowa

Mother and a son are Joint Owners of family home with right of survivorship. Son lives in the home alone. He was placed on the deed when father died. No sum of money changed hands.

Automobile is registered to mother and same son. Mother purchased the car. Son is the only driver of the car.

Mother is a full time resident of a nursing home, does not drive or return to family home.

Mother's full nursing home cost is paid from her trust account. Mother makes annual gift of $12,000 at the first of the year to son and his only sibling brother from trust account.

Mother and both sons are joint owners of a bank checking account, which was originally mother's and sons names were added to account when father died. Only mother's funds are deposited to the checking account, via direct draft from her trust account.

Son who lives in family home has financial power of attorney. He also writes most of the checks drawn on the bank checking account. Second son writes none, and mother writes an occasional check to friends for weddings etc.

All expenses for the family home are paid through the mother's checking account, including additional services which were added since she left the family home (eg. cell phone and computer internet subscriptions for the resident son.) All expenses for the jointly registered car are paid from the mother's checking account, including gas, maintenance, etc. Additional expenses of resident son are also paid by himself via checks written on the mother's checking account (eg. medical, subscriptions, etc.).

Here is the question: Since the total tax free gift amount for the resident son was used at the first of the year, do the funds paid for the upkeep of the house in which the son lives, the automobile expenses, and other personal expenses paid for and by himself from the mother's bank account constitute a gift from the mother for which tax is owed?

 

[seniorjudge]

What is the name of your state? Iowa

Mother and a son are Joint Owners of family home with right of survivorship. Son lives in the home alone. He was placed on the deed when father died. No sum of money changed hands.

Automobile is registered to mother and same son. Mother purchased the car. Son is the only driver of the car.

Mother is a full time resident of a nursing home, does not drive or return to family home.

Mother's full nursing home cost is paid from her trust account. Mother makes annual gift of $12,000 at the first of the year to son and his only sibling brother from trust account.

Mother and both sons are joint owners of a bank checking account, which was originally mother's and sons names were added to account when father died. Only mother's funds are deposited to the checking account, via direct draft from her trust account.

Son who lives in family home has financial power of attorney. He also writes most of the checks drawn on the bank checking account. Second son writes none, and mother writes an occasional check to friends for weddings etc.

All expenses for the family home are paid through the mother's checking account, including additional services which were added since she left the family home (eg. cell phone and computer internet subscriptions for the resident son.) All expenses for the jointly registered car are paid from the mother's checking account, including gas, maintenance, etc. Additional expenses of resident son are also paid by himself via checks written on the mother's checking account (eg. medical, subscriptions, etc.).

Here is the question: Since the total tax free gift amount for the resident son was used at the first of the year, do the funds paid for the upkeep of the house in which the son lives, the automobile expenses, and other personal expenses paid for and by himself from the mother's bank account constitute a gift from the mother for which tax is owed?

Q: Here is the question: Since the total tax free gift amount for the resident son was used at the first of the year, do the funds paid for the upkeep of the house in which the son lives, the automobile expenses, and other personal expenses paid for and by himself from the mother's bank account constitute a gift from the mother for which tax is owed?


A: Take all of the financial records to a tax CPA and ask for a tax liability audit.

 

[xylene]

What is the name of your state? Iowa

Mother and a son are Joint Owners of family home with right of survivorship. Son lives in the home alone. He was placed on the deed when father died. No sum of money changed hands.

That, in and of itself is a complex situation.

Automobile is registered to mother and same son. Mother purchased the car. Son is the only driver of the car.

Whose name is on the title?

Mother is a full time resident of a nursing home, does not drive or return to family home.

That's sad. I hope she is comfortable. Does she still enjoy her full mental faculties?

Mother's full nursing home cost is paid from her trust account. Mother makes annual gift of $12,000 at the first of the year to son and his only sibling brother from trust account.

12,000 per brother you mean?

Mother and both sons are joint owners of a bank checking account, which was originally mother's and sons names were added to account when father died. Only mother's funds are deposited to the checking account, via direct draft from her trust account.

Son who lives in family home has financial power of attorney. He also writes most of the checks drawn on the bank checking account. Second son writes none, and mother writes an occasional check to friends for weddings etc.

Son is empowered to write checks for Mother - its still Mother's money.

All expenses for the family home are paid through the mother's checking account, including additional services which were added since she left the family home (eg. cell phone and computer internet subscriptions for the resident son.) All expenses for the jointly registered car are paid from the mother's checking account, including gas, maintenance, etc. Additional expenses of resident son are also paid by himself via checks written on the mother's checking account (eg. medical, subscriptions, etc.).

Here is the question: Since the total tax free gift amount for the resident son was used at the first of the year, do the funds paid for the upkeep of the house in which the son lives, the automobile expenses, and other personal expenses paid for and by himself from the mother's bank account constitute a gift from the mother for which tax is owed?

The payment of household and automotive and personal maintenance expenses as you describe, per IRS publications is most likely a gift under tax law. (Are these payments compensation for work- you don't discuss this...)

Medical expenses are exempt if paid directly from mother to provider or insurer (same with edu expenses.)

Taxes being due is another matter. There is a substantial lifetime exemption. THat exeption only comes into play for the amount over 12,000 per recipient. It is nessecary to file for any gifts totalling more than 12,000 per recipient. That does not mean gift taxes are owed.

Essentially, their is no straight YES or NO to your question. It will depend on the particulars. The most filially & tax advantageous situation in the short and long term will depend on a large number of factors, perhaps most importantly the size of Mothers estate.

Brothers and mother should talk to a well qualified tax / estate proffessional

I am just an informed layperson, who loves online research, and has some ancedotal personal familarity with gift tax issues. I hope a profffesional chimes in with a seasoned opinion

 

[LdiJ]

I would say that yes, the money's expended to support the resident son are additional gifts that may require the mother to file a gift tax return. However, that does not mean that any gift tax would be due and that does not mean that all of the money is reportable as a gift. Gift tax would only be due if mom has exceeded her lifetime maximum for gifting (2 million for 2006).

I echo the others in saying that a consultation with a local tax professional is in order. It does not necessarily have to be a CPA. An enrolled agent could equally advise you.