Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

Federal income tax question to determine if gift taxes are

involved. JA: What state are you...
Federal income tax question to determine if gift taxes are involved.
JA: What state are you in? It matters because laws vary by location.
Customer: Oklahoma
JA: Has anything been filed or reported?
Customer: Purchased a house 13 years ago with my son. I was listed as a co-borrower and also on the deed. Now selling the house. Proceeds from the sale = $64,000. I plan to take $12,000 in expenses and costs related to the sale and have the remainder transferred to my son. Concern is that the IRS may view anything over the $14,000 gift tax amount as a gift and impose taxes accordingly.
JA: Anything else you want the lawyer to know before I connect you?
Customer: During the first few years my son lived in the house he had two room mates and I wrote-off 2/3 of the mortgage interest as a rental. For the last 8 of the 13 years of ownership he has taken 100% and made all of the payments.
Show More
Show Less
Ask Your Own Tax Question
Answered in 6 minutes by:
4/21/2017
socrateaser
socrateaser, Lawyer
Category: Tax
Satisfied Customers: 39,475
Experience: Retired (mostly)
Verified

Hello,

There is no gift tax imposed on any gift in excess of the $14,000 annual exemption, unless the total of all lifetime gifts to all persons as reported to the IRS exceeds $5,490,000.00 (2017 amount; indexed upwards each calendar year).

Most people never reach the tax threshold amount. But, you must report the gift, regardless, on IRS Form 709.

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer (click 3, 4 or 5 stars) -- otherwise, Justanswer retains your entire payment, and I receive nothing for my efforts in your behalf.

Thanks for using Justanswer!

Ask Your Own Tax Question
Customer reply replied 7 months ago
OK, if the total proceeds = $64,000 and I keep $12,000 to cover expenses, that leaves $52,000; half would be $26,000 each. However, my son is taking the entire $52,000, couldn't the IRS view anything over the $14,000 portion of my share ($12,000) as a taxable gift?
Customer reply replied 7 months ago
I prefer not to switch to a live call. Thank you!

There is no tax on any gift in excess of $14,000, unless the total lifetime gifts of the donor exceeds $5,490,000.00. So, the answer is, "no."

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer (click 3, 4 or 5 stars) -- otherwise, Justanswer retains your entire payment, and I receive nothing for my efforts in your behalf.

Thanks for using Justanswer!

Ask Your Own Tax Question
Customer reply replied 7 months ago
Then why do they specify $14,000 per year; doesn't make sense. $5,490,000 divided by $14,000 = 392 years. What am I missing?

The $14,000 exemption is a vestigial provision of the Internal Revenue Code that was not repealed during the George W. Bush Presidential Administration, when the estate and gift laws were changed to increase the lifetime gift exclusion from $1,000,000 per person, to $5,000,000, indexed annually. It is, in fact, a relatively useless statute for most persons. However, for certain very wealthy persons, it is possible to donate $14,000 to each of an unlimited number of individuals and not have any of the donations count against the $5,000,000 threshold amount (currently $5,490,000). Example:

Bill Gates wants to gift $14,000 to each of 1,000 students who have shown great promise in their educational efforts. He can make a total gift of $14,000,000, and it will have no effect whatsoever on the current $5,490,000 lifetime gift tax exclusion amount.

For the average person, this sort of donation is silly. But, sometimes a grandparent will make $14,000 gifts to perhaps 5 or more grandchildren and children. In such cases the $14,000 annual exemption makes some sense, because it leaves the $5,000,000 untouched to be used at the grandparent's death for their estate transfer.

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer (click 3, 4 or 5 stars) -- otherwise, Justanswer retains your entire payment, and I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

Ask Your Own Tax Question

Hello again,

I see that you have reviewed my answer, but that you have not provided a rating. Do you need any further clarification concerning my answer, or is everything satisfactory?

If you need further clarification, concerning this matter, please feel free to ask. If not, I would greatly appreciate a positive feedback rating for my answer (click 3, 4 or 5 stars) – otherwise, Justanswer retains your entire payment, and I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

Ask Your Own Tax Question
Customer reply replied 7 months ago
Great answer! So even though I am just a co-borrower on the mortgage, and listed second on the deed, I need to file an IRS Form 709?
If yes, what amount would I need to report on the IRS Form 709 as a gift?
- The entire amount of the proceeds from the sale divided by 2: $64,000 / 2 = $32,000; or
- The amount of the proceeds from the sale, minus expenses, divided by two: $64,000 - $12,000 / 2 = $26,000; or
- $32,000 - $14,000 = $18,000; or
- $26,000 - $14,000 = $12,000; or
- $14,000
Thanks for all of your help!

Lawyers are horrible accountants (and that includes tax lawyers, like me ;->). I don't feel comfortable providing you with a definitive number, because I don't know all the specific facts.

In general, however, whatever amount you would have been entitled to were you to not gift anything to your son is the value of the gift. If you were only a co-borrower, then you wouldn't be entitled to any of the proceeds of sale -- so, the gift would be the other way around -- from your son to you -- and there would still be no tax.

But, if you and you son had an agreement under which you would share the proceeds, then if you were entitled to one half of the net, then your gift would be that half to which you are entitled.

If you need further clarification, concerning this matter, please feel free to ask. If not, I would greatly appreciate a positive feedback rating for my answer (click 3, 4 or 5 stars) – otherwise, Justanswer retains your entire payment, and I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

socrateaser
socrateaser, Lawyer
Category: Tax
Satisfied Customers: 39,475
Experience: Retired (mostly)
Verified
socrateaser and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 7 months ago
OK. Thanks again for all of your help and thorough explanations! I just hope Turbo Tax has the 709 included next year. What a horrendous form!! Have a great weekend!

You're welcome and a great weekend to you as well!

Thanks again for using Justanswer!

Ask Your Own Tax Question
Ask socrateaser Your Own Question
socrateaser
socrateaser
socrateaser, Lawyer
Category: Tax
Satisfied Customers: 39,475
39,475 Satisfied Customers
Experience: Retired (mostly)

socrateaser is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,336 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,906 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
My question is about donations tax in South Africa. I am in
My question is about donations tax in South Africa. I am in the process of donating a flat I bought a few years ago to my daughter. My question: must donations tax be based on the current market value… read more
taxmanrog
taxmanrog
Master\u0027s Degree
720 satisfied customers
The gift tax return was due in year 2012 and 2013 and donor
the gift tax return was due in year 2012 and 2013 and donor forgot to file it. now what are the consequences for donor and receiver?… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
872 satisfied customers
Do you have experience with gift tax in the state of
Do you have experience with gift tax in the state of Wisconsin? … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,906 satisfied customers
TURBO TAX SAYS THE IRS OWES ME 1000$ FOR 2016. THEY SAID
TURBO TAX SAYS THE IRS OWES ME 1000$ FOR 2016. THEY SAID THIS IN FEB1 . IN AUG8TH I RECIEVED A FORM FROM IRS SAYING MY SCHOOL HAD NOT SENT A 1098T NOT TRUE BUT IT SAID SCHOLARSHIPS AND GRANTS INSTEAD … read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
Hawaii state law to automatic gratuities are taxed? Hotel
Hawaii state law to automatic gratuities are taxed? … read more
abci168
abci168
Principal
27 satisfied customers
Can we claim the mortgage interest for a second home on
Can we claim the mortgage interest for a second home on property that we purchased and have developed a rustic "camp" on? We have an outhouse (bathroom), outdoor kitchen area, and a small building we … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,592 satisfied customers
On october 30th I mailed form dt individual to the IRS in
on october 30th I mailed form dt individual to the IRS in Connecticut Certified mail showed it had been delivered on Nov 2 I have heard nothing … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
In Alaska operators of pull tabs are required to donate a
In Alaska operators of pull tabs are required to donate a portion of the proceeds to a 501c3 organization. Is the receipt of these donations by a 501c3 considered Unrelated Trade or Business Income? … read more
taxmanrog
taxmanrog
Master\u0027s Degree
720 satisfied customers
Form 886-A Deductible Home Mortgage Interest Taxpayer has
Form 886-A Deductible Home Mortgage Interest Taxpayer has $1,000,000 in Grandfathered debt. Line 9 Form 886-A - is this line amount after deducting the garandfathered debt… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I entered my mortgage interest in the section marked
I entered my mortgage interest in the section marked mortgage. … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
What are tax implications when docating small IRS to state
What are tax implications when docating small IRS to state university … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Can you write off mortgage interest on a vacation home the
can you write off mortgage interest on a vacation home the home price 54000.00 … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,906 satisfied customers
Mortgage Interest Taxpayer inherited two homes in the same
Mortgage InterestTaxpayer inherited two homes in the same year. One from each parent, both were primary resident of deceased parent. Deceased parents were divorced and both died within 12 months of ea… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,906 satisfied customers
1098 Mortgage interest form: My wifes name is on the loan
1098 Mortgage interest form: My wifes name is ***** ***** loan and on this form, however, I've been making the payments and would like to claim this on my tax return … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,251 satisfied customers
Regarding the 'capitalize the mortgage interest'. I was a
Regarding the 'capitalize the mortgage interest'. I was a partner in a rehabbing/flipping real estate business. We rehabbed two properties in 2016 and sold them in 2017. According to the first propert… read more
taxmanrog
taxmanrog
Master\u0027s Degree
720 satisfied customers
FEDERAL INCOME TAX: A SINGLE WOMAN RECEIVES A 2016 FORM W-2
FEDERAL INCOME TAX: A SINGLE WOMAN RECEIVES A 2016 FORM W-2 FROM HER EMPLOYER WITH A TYPO IN THE SOCIAL SECURITY NUMBER. TO DATE THE EMPLOYER HAS NOT PROVIDED A "CORRECTED" FORM W-2. IS THERE AN IRS "… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,251 satisfied customers
I filed my taxes with Turbo Tax and submitted the forms with
I filed my taxes with Turbo Tax and submitted the forms with E-File on April 11. A few days later I received an e-mail saying that my file was rejected due to a Turbo Tax problem, so following instruc… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,251 satisfied customers
Is a 1040 US Individual Income Tax Return federal income
Hi Is a 1040 US Individual Income Tax Return federal income taxes owed to the US government? Or is it FICA? I received a letter owing some back taxes and since I'm a priest with a weird set of tax exc… read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
682 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x