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Good afternoon. Your accountant is correct. These amount paid to the siblings would be considered gifts. But, there would be no taxes on the transfers. A recipient of a gift does not pay gift tax
. And, from the son's standpoint as a donor, there should also be no gift tax consequences. Each donor can give $14,000 per year per person under the annual gift exclusion. In addition to that, each person has a $5,120,000 lifetime exemption....which means a person can give a cumulative amount of up to $5,120,000 in gifts without incurring gift tax....the donor must file a gift tax return
to let the IRS
know how much of the lifetime exemption is being used, but there will be no gift tax until cumulative gifts have exceeded the $5,120,000.
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