Hello and thank you for using Just Answer,Your accountant is correct. You did not own the combine so you could not sale it. Your father-in-law sold it or gifted it to your brother-in-law. Your father -in-law then gifted the money to you and your wife. If he splits the gift between the two of you then he does not have to report the gift to you and your wife because it is under $13,000. You are not responsible for reporting the gift nor for paying any tax on this money. Your father-in-law bears all the responsibility in this act.
Since you each got $20,000 your father-in-law must report the gifts to you each that was more than $13000 but you still need do nothing.
So it's my father in laws tax liability not my brother in laws?
Father-in-law owned the combine. He also sold it. Even if he directed the income to be given to other parties, he still sold it.
My father in law informed me that he was not gifting the money to us. He wanted me to inform my accountant that the funds came from the sale of a combine which is farm equipment. That has no bearing?
Only for him because then he would not have to report the sale. If you own no interest in that farm you are not allowed to absorb his income or deductions. IRS does not allow for reassignment of income.
He would have had to gift the combine to you prior to the sale for you to be able to sale it.
Understood...Thanks for your assistance!
Your positive rating is always thanks enough.If you could also participate in the very short survey that Just Answer will send you by e-mail I would appreciate that very much.
Listen to your accountant!
Let me know if you cannot see the rating option. Sometimes there are problems in CHAT with that.
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One more question
What happens to the other siblings that pay taxes on the money? are they essentially giving money to the IRS for nothing?
Plus they are filing incorrect returns.
And them paying the taxes in no way alleviates my father in law from his responsiblity?
Not at all!