does anyone know?? gift taxPrev TopicNext Topic

• tjsmarine

  

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  Oct 5, 2004, 7:22 pm

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  if you bought a house or  car and then sold them the car for half or even a dollar would that still fall under the gift taxxx laws as far as money goes i have done alot of reading and i still can't find out anything specific on getting around gift taxes i mean wiht all the rich peopl like athelets that buy their mom and family things it has to be around the gift tax can anyone help i am planning for the big win
• Babel

  

  Fantasy Land
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  Oct 5, 2004, 9:32 pm

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  I believe that any time you sell something for below the market value it's considered a gift. But with the ending of the estate tax (should this be made permanent) I would imagine the gift tax would also be removed since it goes hand in hand with the estate tax.
• four4me

  

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  Oct 5, 2004, 10:39 pm

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  here's what i found and you should check with your state try typing gift tax and your state in your search engine.

  I don't know what you mean about getting around it. If you win a large amount and wish to give something away you need an estate lawyer who specializes in that area. Let them put everything in one package and for one fee.

   

  I.R.S. Estate Tax Group 1114
  S.B.S.E. Area 15 (International)
  950 LEnfant Plaza, S.W.
  Washington, DC  20024
  Telephone (202) 874-1660

  This telephone number is only for questions about the estate and gift taxation of nonresidents.  For other questions, use (800) 829-1040.

  The annual exclusion for gifts in 2004 will remain at $11,000.
• Jorli D

  

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  Oct 5, 2004, 10:55 pm

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  The big win will be taxed and there is no way around that. When it comes to giving money to relatives or friends, you can give them whatever amount you want, but either they or you will pay the tax on it.  You can choose to give and pay the required gift tax, or you can give them an amount and make them responsible for the tax on it.  I would do the latter.  The lottery in some states will respect the latter arrangement and therefore that would secure the giver that he/she will not be taxed for the money he/she gives to others at the claiming of the prize.

  Of course the tax laws change every tax year and the money is considered personal income, and depending on your tax base, you may not be paying a great amount on the money anyway.  But hey, this is America where you are guaranteed death and taxes.

  Pay your taxes with a smile!
• tjsmarine

  

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  Oct 6, 2004, 12:19 am

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  thanks for the info... i have heard of the rich starting "family" ran charities so that the money they give will then be taken by say his/her parents to munipulate the tax of giving not sure if its true but it sounds good to me.
• four4me

  

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  Oct 6, 2004, 3:23 am

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  tjsmarine I feel the same as you do if I won a big amount and I wanted to be generous with my money by taking care of my family and uncle sam already got his cut. Then he takes his cut again from the people you share the wealth with. the last thing you want to do is try and cheat uncle out of his money. Remember he will possible be watching how you spend your money. A good example of this happened a couple weeks ago when Oprah gave away about 250 cars to needy people. When these people got the cars they were all hit with a tax bill many couldn't afford to pay the tax on their new cars and ended up selling the car to pay the taxes. That's why I say seek the advise of an estate lawyer they will know all the in's and out's of giving gifts to family and friends. Some people set up a trust fund for family members. There are all kind of ways to set that up as well.
• Babel

  

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  Oct 6, 2004, 3:45 am

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  I think splitting the jackpot among a group of people or even family would be different from what TJ is suggesting. TJ wants to buy things and then sell them at below market value to friends and family. That is a gift. The IRS is very particular about things like this.
  
  
  
  In Oregon while only a single person can collect a lottery win there is a form you can fill out to disburse the prize among multiple recipients. I would hope that such a split wouldn't suffer both income tax and gift tax. Hopefully I'll one day be in a position to tell you for sure one way or the other. ;-)
  
  
  
  The reason I brought up estate tax is that the gift tax results from the existance of the estate tax. If you could simply gift your estate to family shortly before your death there wouldn't be much point in an estate tax. So the gift tax was created so gifts to a particular individual over a certain ammount (currently $11,000 as four4me said) had the estate tax applied to it. What this means is you can give a particular person $11,000 in gifts in a year without incuring gift tax. What you can do though is both you and your spouse can each give 11k to the same person for a total of 22k. Or you could both give each member of a family 11k each for a total of 44k (two givers and two recipients). It's kind of annoying for things like what most lottery winners would want to do, such as a gift to parents. Obviously your parents are going to die before you so you're really not trying to evade the gift tax. But the law is black and white and doesn't care about intent.
• tjsmarine

  

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  Oct 6, 2004, 12:19 pm

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  thanks again....... i just wish i could talk to an estate planner and they give me the up & up answers that i need before i win so when that day comes i want be blind... but i can't afford to give them money just for answers
• twisted

  

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  Oct 6, 2004, 12:38 pm

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  Quote: Originally posted by tjsmarine on October 06, 2004
  

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  thanks again....... i just wish i could talk to an estate planner and they give me the up & up answers that i need before i win so when that day comes i want be blind... but i can't afford to give them money just for answers

  
  

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  If you every win, you will have all the time in the world to make up your mind about these things.  Just relax for now and wait for the day to come.