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There's no tax due, but technically he would have to file the gift tax return and after the 13,000. annual exclusion there would be $4,000. of the "gift" that would use a portion of his $1,000,000. lifetime gift tax exclusion. However,
I'm not sure that there was a gift if he has possession of the car. It seems to me that the transfer was made as a matter of convenience and there was really no intent to make a gift to you.
Is that "legal"That's federal law; how about the state of FL, which doesn't have an income tax (gift tax, I don't know)
There's no penalty when there's no tax. There's no filing requirement in Florida as there is no gift tax.
To be "safe" should he file the gift tax return or "take his chances" and explain the reality to an agent if audited
He's not going to get audited for a gift tax when there's no tax and in effect no gift.
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Who keeps records of these sorts of transactions? All I have is a slip of paper from Honda showing we paid for the car in cash, in my name
Nobody. Do you think he'll be making gifts in excess of the annual exclusion that will total over $1,000,000.?
The 1,000,000 is a lifetime exclusion?
No he'll likely never come close to that limit
But there's no gift here anyway.
The letter I have from Honda is calleda Deposit Gift Letter
I'm happy with that interpretation of the events; I bought the car, but it's his and solely used by him
OK thank you
Plus there's no risk, no penalty even if it was deemed a gift.
Because with the exclusion he wouldn't owe any tax, right?
Great, that's all for now.