How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Lev Your Own Question

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22632
Experience:  Taxes, Immigration, Labor Relations
Type Your Tax Question Here...
Lev is online now
A new question is answered every 9 seconds

My cousin wants to give us gift in the amount of 150,000 for

Resolved Question:

My cousin wants to give us gift in the amount of 150,000 for a downpayment on a new house. My brother would like to thank him in the future with a gift of 150,000. Do we have to pay taxes on either of these transactions? I am reading that we would only be taxed if the amount is over 1 million in a lifetime. Also, because there are two gifts involved, would it be confused with repaying a loan?
Submitted: 4 years ago.
Category: Tax
Expert:  Lev replied 4 years ago.

A gift is defined as - a voluntary transfer of property from one person or entity to another made without charge or consideration. - http://www.lectlaw.com/def/g007.htm

 

Because your brother plan to pay that amount off - it is not a gift - but most likely a loan.

Because there is no any interest charged - the implied interest would be considered a gift - but the principal of $150,000 is not a gift but it is a loan.

 

As a recipient of a gift - you do not need to claim it as income. Regardless of the value of the gift. Please see for reference IRS publication 525 page 33 - http://www.irs.gov/pub/irs-pdf/p525.pdf

graphic

 

The donor - might be required to file a gift tax returns if the gift amount is above $13,000 per person per year (for 2010).

There will not be any gift tax unless lifetime limit of $1,000,000 is reached.

 

Let me know if you need any help.

 

Customer: replied 4 years ago.

 

If it would be considered a loan, then what kind of taxes, if any, would have to be paid, and by which party. My cousin gives me a gift - no taxes for me, and my cousin may have to file, but no taxes for him, either on a 150,000 amount - correct?

 

Then my brother, who has nothing to do with my gift transaction, wants to give a gift to my cousin's wife - would it be treated as above?

Expert:  Lev replied 4 years ago.

If that is a loan - it is not a taxable income for you as a recipient and not a taxable income for a creditor when it is paid back.

You are correct -

-- the gift is not a taxable income for you as a recipient;

-- if your cousin never made any taxable gifts - because the gift value is above annual allowances - your cousin should file a gift tax return - but there would not be any gift tax due.

-- the gift your brother would made to your cousin's wife - would be treated the same way if it is not connected to your original transaction.

 

Let me know if you need any help.

 



Edited by LEV on 4/20/2010 at 9:21 PM EST
Customer: replied 4 years ago.

Okay, final scenarios . . .

 

My cousin gives me a gift in the amount of 150,000 and in a couple of weeks, I tell him I can't accept it. The bank will show 150,000 coming out, then 150,000 going back in. What are the tax issues then?

 

or

 

My cousin gives me a gift, but it is really a loan between my cousin and my brother (an advance on the sale of my brother's home. Again, 150,000 coming out, then back in, tax issues?

 

and finally,

 

If the last scenario, above, was to take place. Could we prepare a promissory note covering the gift/advance without tax issues?

 

 

Expert:  Lev replied 4 years ago.
If your cousin gives you a gift and you do not want to accept it - you simply do not deposit that amount into your bank.
You may borrow the money from your cousin and repay him back in a couple of weeks - there is no need to call that a "gift"

As the whole transaction looks as the money comes from your brother to you - that is a gift from your brother.
You actually plan to take a loan from your cousin and your brother will re-pay the loan for you - so that is considered as a payment to your.

You do not have to have any paperwork, but when you will pay a down payment on a new house - the mortgage company might ask you about a source of the money - and you might need a document.
For tax purposes - you do not need any documents - you might have them for your record if needed.

Let me know if you need any help.
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22632
Experience: Taxes, Immigration, Labor Relations
Lev and other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.