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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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after issuance of Quit Claim deed (wife & I grantors)...son

Resolved Question:

after issuance of Quit Claim deed (wife & I grantors)...son grantee...any future IRS claim involving wife or me, is property in reach of IRS?
Submitted: 6 years ago.
Category: Tax
Expert:  Merlo replied 6 years ago.

Hello JA Customer,


Where the taxpayer's property is transferred such that someone else holds title to the property, but the taxpayer continues to enjoy the full use and benefit of the property, the person holding title may be deemed to hold the title as a nominee for the taxpayer, i.e., in name only. In such an instance, the IRS may file a nominee lien with respect to the property. The lien filed in the name of the nominee is filed only with respect to the taxpayer's property held in the name of the nominee.


The government bears the burden of proving the nominee status by a preponderance of the evidence. Factors considered in making this determination include the following:

  • no consideration or inadequate consideration paid by nominee
  • property placed in nominee's name in anticipation of a suit or the occurrence of liabilities while the transferor continues to exercise control over the property
  • close relationship between transferor and nominee
  • failure to record conveyance
  • retention of possession by the transferor
  • continued enjoyment of benefits of the property by the transferor

Since you would basically be signing over this property to a close relative for no monetary consideration and in anticipation of a possible lien, this property would still be subject to lien by the IRS.



Thank you



Customer: replied 6 years ago.
the fact that our son paid over $98,000.00 to satisfy the mortgage (2003) and permit my wife and I a clear warranty deed...what consideration would the IRS have to make given that situation...given the fact that we retain possession,enjoy benefits of property, etc., etc.
Also,we have a recorded Quit Claim deed on record with county courthouse. Is that not proper record of conveyance?
Expert:  Merlo replied 6 years ago.

Hello again joyce,


Even though you may have recorded the quit claim deed with the county, that is only one of several factors that the IRS looks at in determining whether or not the property is simply being held by a nominee. Most, if not all of the other factors on that list still appear to apply in your situation.


I am not quite clear as to what transpired with the $98,000 that you say your son paid on your mortgage. If your son was not legally liable for this debt and simply paid that amount on your behalf, he should have filed a gift tax return back in 2003 to report this as a gift that he gave to you. No gift taxes would have been due since the amount is still well below the $1 million lifetime exemption he is allowed on gifts, but he would have been required to report the gift by filing Form 709.


If you can show that your son did contribute this amount of money to payments on the home, then you might possibly have a case for the IRS not to include the entire amount of the property in the tax lien. But there are enough other factors here that they could still certainly file a tax lien for the value of the home that exceeded that amount.



Thank you



Customer: replied 6 years ago.
2008 a post nuptial agreement placed all real and personal property in my wife's possession. Same time we filed the Quit Claim Deed. Can this allow the issuance of a warranty deed in her name only for the home?
Expert:  Merlo replied 6 years ago.

Hello joyce,


Unfortunately that is not a tax question and is something that would need to be answered by a real estate attorney.



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