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Hi. I have a question regarding gift tax. I am starting a business

and my parents are considering...
Hi. I have a question regarding gift tax. I am starting a business and my parents are considering a request to help me begin with a $50k cash gift. We live in California.

I have researched the gift tax laws and this is what I have learned. It appears that as of January 1, 2013 parents may give a cash gift of $28,000 without paying any gift tax. That's $14,000 for each parent. But I also read that any amount exceeding the $28,000 annual gift tax limit can also absolve the givers of paying taxes on their gift if the givers (my parents in this case) apply the balance to their LIFETIME UNIFIED CREDIT which appears to be up to $5 million.

Therefore, looking at a $50,000 (early inheritance) cash gift, $28,000 cash would be exempt from the gift tax and $22,000 would be applied to their $5 million unified credit.

I have 2 questions:

1) Is the above information correct?
2) What tax liabilities do I face, as the RECIPIENT of a $50,000 gift from a relative?

Thanks.
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Answered in 2 minutes by:
6/9/2013
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55,810
Experience: 29 years of experience as a tax, real estate, and business attorney.
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Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good evening. 1) That is correct....except the lifetime credit has been raised to $5,250,000 per person..so between the two of them they could give up to $10,500,000 without any gift tax. They will need to file a gift tax return however for amounts over the $28,000 to show the IRS how much of their lifetime exemptions they are using. 2) You have no gift tax or reporting requirements as a recipient of a gift.



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Richard
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