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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
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Experience:  Extensive Experience with Tax, Financial & Estate Issues
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If i do construction work on my parents home, and they sell

Customer Question

If i do construction work on my parents home, and they sell it and give me the profit that results from the construction work. Is this considered a gift, or would it be considered a payment for services like they would have paid to a contractor?
Submitted: 1 year ago.
Category: Tax
Expert:  Stephen G. replied 1 year ago.
How would they go about allocating the profit that resulted from the construction work?There's nothing to prohibit you from giving your parents a gift of the construction work, but the costs involved would not be deductible.If the transaction were structured with the principal purpose of avoiding tax on the work that you performed, then the "gift" would be taxable to you.If the two separate transactions were not closely tied together in time or amount, there would be no taxable transaction for you or for them.If the amount of funds that they gave you were in excess of $14,000., they would be required to file a gift tax return on Form 709 due at the same time that their income tax return was due, but there would be no gift tax due.