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I have a friend who just inherited $67,000,000.He has an

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attorney now working things out...
I have a friend who just inherited $67,000,000.He has an attorney now working things out for him. He said, after his $67,000,000 is taxed by IRS, he wants to hire me to his estate under his EIN number so we can go in business together and he plans to give me $10,000,000 dollars. Would this $10,000,000 get taxed in addition to the taxes taken from the 67,000,000?
Submitted: 1 year ago.Category: Tax
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3/2/2016
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 year ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,857
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi, I can help here

...

I hold a JD (Juris Doctorate, a doctoral degree in the law), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security & Medicare, estate, corporate & tax advice since 1986

...

The money he pays to YOU would be taxed to you (not to him again as that has already been taxed)

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 year ago

The tax policy/logic here is as follows:

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 year ago

IRS taxes all increases in net wealth... that comes from either (1) compensation (being given an amount with the expectation that you will be giving something in exchange - Here, your services/time) ... (2) selling something for more than you have In it (a capital gain) ... or (3) passive income, such as interest dividends or rents

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 year ago

If he simply gave you the money out of the goodness of his heart ... then this would be considered a gift (NOT taxed to you, because gifts and bequests are excluded from income taxes under IRC §102)

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But the amount over and above the lifetime gift exclusion of $5,450,000 would be taxed as a GIFT tax to him (the giver)

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The person giving gifts (or the estate, for that FINAL gift) bears the tax.

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Gift and estate taxes are transfer taxes (again paid bu the giver)

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 year ago

But here, they way you've defined it this would b treated as compensation to you, therefore taxed as income.

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I'd be glad to discuss the various ways of structuring this to reduce or eliminate taxation ... (can get quite complicated, really beyond the scope of what can be handled here by chatting back and forth) ... but there are smart ways to access the money.

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Regardless of that... Yes, this would taxable to you, if he simply gives you money and there's some expectation that you'll be doing something FOR that

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 year ago

I've made the phone consult offer,,, accept if you'd like to discuss further.

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But, If this HAS helped, (and you don't have other questions) I'd really appreciate a positive rating (using the rating request, faces, or stars on your screen)

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That's the only way I'll be credited for the work here.

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Thank you!

Lane

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,857
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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