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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3844
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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Just some follow-ups here: - As you quoted "Nonresidents

Resolved Question:

Just some follow-ups here:

- As you quoted "Nonresidents not citizens of the United States are subject to gift and GST taxes for gifts of tangible property situated in the United States.", so it means that, my stocks (that I obtained from company stock reward program as my working income) in my US brokerage account are considered as situated in the US, thus are still subject to gift taxes, right?

- If I want to send these stocks (that I got from company stock program) to my parents and these stocks are subject to gift taxes and can be used against the lifetime exclusion, I can also choose to send them in different batches in different years, which is essentially the same as sending them in one batch in 2013, right? To explain in a concrete example, if I want to send 1 million USD worth stocks to my parents as gifts, I can send them only in one batch when it is worth 1 million in 2013; or I can choose to send them 0.5 million worth in 2013 and then the rest in 2014. And assuming the rest is only worth 0.4 million in 2014 due to market price drop, then in this example, actually sending them in different batches can result in using less lifetime exclusion quota. So I can actually design a plan to minimize the use of the lifetime exclusion.
Submitted: 11 months ago.
Category: Tax
Expert:  Lane replied 11 months ago.

Lane :

Most certainly ... This is called gift and estate tax planning. You can, and should, have a plan. Further? you have nailed it, exactly. There are two small points .....

Lane :

(1) The lifetime exclusion after the last tax act, will now increase very year ... So the difference between the rate at which the estate tax goes up and the rate at which your expected gifts go up in value should not be ignored ... (and to state the obvious) the rate at which the lifetime exemption goes up may be more predictable than the value of those stocks ... (2) This may not be a huge factor, given the size of gifts your are talking about, but the annual exclusion of 14,000 means that you can gift up to 14,000 PER PERSON, PER YEAR to as many as you like and there is NO reporting of any kind (no 709 form) and no reduction in lifetime exclusion.

Lane :

I have a client, who is gifting to both her (1) son & daughter and their husband and wife AS WELL AS (2) six grandchildren ... This is 140,000 per year that can be gifted with NO reduction to the lifetime exemption and NO reporting required .... this can also be done through trust (which keeps the young one from spending the money the minute they reach the age of majority. ... This is the BEST estate plan, give it all away during life (legitimately, under radar screen)

Lane :

Finally, just to be sure I answered your original question; (1) Yes the stocks ARE subject to gift tax, and wold be valued at the time of the gift. And, (2) yes, sending them over time is the same (qualified by the different valuation dates) as sending them all at one time (when we're talking about the fact the total amounts send during life, is what's netted against the lifetime exclusion).

Lane :

Hope this helps'

Lane :

Lane

Lane :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3844
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 4 other Tax Specialists are ready to help you
Expert:  Lane replied 11 months ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  Lane replied 11 months ago.

Hi Bob,

… just checking back in here, as I never saw you come into the chat.

Let me know if you need anything else at all on this.

But yes, you understand completely.

Lane

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