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Thanks for the info. Would we still be liable for Gift Tax

using the $13,000 exemption? I.e., Fair...
Thanks for the info. Would we still be liable for Gift Tax using the $13,000 exemption?

I.e., Fair Market Value is $20,000 and he sold to me for $6,000; that would be a gift of $14,000. Minus $13,000 exemption, tax would be on $1,000?
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9/3/2012
jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
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Greetings,

Although a gift tax return on Form 709 is required when gifts for the year are more than the annual exclusion amount, there is not any gift tax due until the lifetime limit of $5 million in gifts is exceeded.

The gift tax return would reduce the amount of lifetime gifts before tax is due by $1000. No tax would be payable with that return.

For information from the IRS on this topic and links to forms see http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Frequently-Asked-Questions-on-Gift-Taxes

Please ask if you need clarification.
Thank you.

jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
Verified
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