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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 53717
Experience:  29 years of experience as a tax, real estate, and business attorney.
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My mother lives in Oklahoma and has cancer. She has four children

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My mother lives in Oklahoma and has cancer. She has four children and would like to distribute assets including a home and some stock to the kids while she is still alive. How could this be done without tax liability?
Submitted: 5 years ago.
Category: Tax
Expert:  Richard replied 5 years ago.

Good afternoon. Your mother can make gifts of $13,000 per year per child under the annual gift tax exclusion. In addition, she has a $1,000,000 lifetime gift exemption which would allow her to gift another $1,000,000 worth of assets with no gift tax liability. I will tell you this, however. If she transfers it now rather than at death, the basis in such assets is carried over from her basis and if she transfers it at death, the basis is stepped up to fair market value. As a result, when you go to sell the assets, there will be a big difference in tax owed.



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The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

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Customer: replied 5 years ago.
thanks for your answer- I accepted the answer. so do I understand that there will still be a tax liability for the kids even though mom won't have a liability if all gifts are under the limit?
Expert:  Richard replied 5 years ago.

You're welcome and thank you! There is no liability to the kids on the transfer of the assets from mom to kids. But, if the transfer is made before death, the kids will likely have capital gains on the subsequent sale of the assets; conversely, if the transfer is made at death, the basis gets stepped up to the fair market value at the date of death, so the subsequent sale will likely result in no capital gain and thus no tax.

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