Gift Tax

Forum|Forum|3 years ago
July 17, 2023
2 replies
25 views

Good morning, Community,

Maybe because it's a Monday that would explain why I'm a little slow today! 😉 But trying to work through the ramifications if a parent gifts her only child approx 200k to purchase a home. The $$ came from the sale of her home. I know she would have to file Form 709 but I've only filed this form once before and don't want to miss anything. Also, I still wonder if she wouldn't be better off to purchase the home and simply leave it to her son in her will.

Thank you, everyone, for any additional insight,

Dawn

ProSeries Basic

This topic has been closed for replies.

George4Tacks

Level 15

There is an inheritance tax when someone passes away and is worth over a given amount. Let's say $6,000,000. When a gift is made, then anything over the annual limit (say $15,000) is then recorded to reduce the Inheritance tax limit.

In this case $200.000 is $185,000 over the $15.000. This mean upon death the limit for inheritance tax is $6,000,000 -$185,000 = $5,815,000.

Is this hypothetical person worth anywhere near $6M? Do they want to have a will probated?

P.S. I am cheap, so I do the 709 as a demo, then plug the numbers into a fillable pdf and mail it.

Answers are easy. Questions are hard!

SensibleandHourlyAuthor

Level 6

Thank you, and no, the client does not have near that level of wealth.

Jim-from-Ohio

Intuit Community Champion

One potential issue is if a sale took place. say the kids lived in the house two or three years then it sold for a gain of $ 100,000. if the parents still owned the home they would not qualify for the home exclusion gain as it is not their principal residence. I am sure there are other factors that go into the decision but that is one I thought of.

SensibleandHourlyAuthor

Level 6

Appreciate the response! I, too, considered the possible ramifications of stepped-up basis, but I also am concerned that a Medicaid strategy may be appropriate. I did encourage them to speak to an attorney before making a decision with potentially multiple financial ramifications.

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