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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2280
Experience:  Certified Public Accountant
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I would like to gift my son the sum of $140,000 this

Customer Question

I would like to gift my son the sum of $140,000 this year--this is the first such gift and no other monies has been deducted from his lifetime gift exemption--what are the tax ramifications if this is done
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: I don't believe so
Submitted: 11 months ago.
Category: Tax
Expert:  Mark Taylor replied 11 months ago.

The individual gift exemption for 2016 is $14,000. So any amount above this would be a taxable gift. This amount would go against your lifetime exclusion of $5.4 million. So if you gifted $140,000 your lifetime exclusion would be reduced by $126,000. You would need to filed a gift tax form to report the gift (Form 706).

Expert:  Mark Taylor replied 11 months ago.

Ok you would responsible for the taxes for the time that you owned the business. So you would be responsible for sales tax and payroll taxes (if you had any employees). Neither of these taxes should impact the previous owner. So as long as you paid the sales taxes and payroll taxes for the time that you owned the business you should be fine.

Customer: replied 11 months ago.
$126,000 would be taxable or only if I go over my lifetime exemption
Expert:  Mark Taylor replied 11 months ago.

It is considered a taxable gift but it goes against your lifetime exemption. As a result of being a taxable gift form 706 would be required. There would be no taxes due. The gift would just reduce the 5.4 million lifetime exemption.

Customer: replied 11 months ago.
ok just to get it right==there would be no taxes due as long as I remain under the 5.4 million lifetime exemption and file the form 706 correct
Expert:  Mark Taylor replied 11 months ago.

Yes, you are correct. A few years ago the government combined the gift and estate tax exemption together. This is what makes up the $5.4 million. Yes, the $126,000 would reduce the $5.4 million and there would be no taxes that are due.

Customer: replied 11 months ago.
thank you
Expert:  Mark Taylor replied 11 months ago.

It was my pleasure.

Expert:  Mark Taylor replied 11 months ago.

I hope you found this information to be beneficial. If this answered your question please take a few moments to rate my response. A rating is needed in order for me to receive credit for helping you today. The rating bar is located at the top of the page – ranging from 1 to 5 stars. If you need me to clarify aspect of my response or if there are additional areas of the question that you would like me to consider please let me know. I would be happy to continue the discussion. It has been my pleasure helping you today.