Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

This answer was rated:

Federal income tax question to determine if gift taxes are…

Federal income tax question...

Federal income tax question to determine if gift taxes are involved.

Accountant's Assistant: What state are you in? It matters because laws vary by location.

Oklahoma

Accountant's Assistant: Has anything been filed or reported?

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.

Accountant's Assistant: Anything else you want the lawyer to know before I connect you?

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: 40,061
Experience: Retired
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 1 year 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 1 year 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 1 year 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 1 year 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: 40,061
Experience: Retired
Verified
socrateaser and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 1 year 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
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask socrateaser Your Own Question
socrateaser
socrateaser
socrateaser, Lawyer
Category: Tax
Satisfied Customers: 40,061
40,061 Satisfied Customers
Experience: Retired

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

1,338 satisfied customers

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

Richard

Richard

Tax Attorney

4,512 satisfied customers

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

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

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

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 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.

< Previous | Next >

Related Tax Questions
I wanted to seek your counsel concerning a few items. I am
I wanted to seek your counsel concerning a few items. I am currently in the process of buying a home and might be using a co-signer for the purchase. He will need to be placed on the title of the home… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Question 1: If I provide my son 20% of down payment towards
Question 1: If I provide my son 20% of down payment towards purchase of house (about $25k), but with agreement that he pays me back 20% when he sells the house, does this have tax implications?Questio… read more
abci168
abci168
Principal
27 satisfied customers
I have a two part question. Question One: My mother no
Question One: My mother no longer resides in the home she owns and she does not file a tax return due to her income level. If I, as her son, am added to the deed to the house would that allow me to deduct the property tax paid on the home providing I am the one who makes the payment? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
A son inherited a small house last year. He wants his mother
Good morning: A son inherited a small house last year. He wants his mother to own it. We believe the limitation on the gift would be $14,000. … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,419 satisfied customers
I am a senior citizen and I co-own a checking account with
My name is***** am a senior citizen and I co-own a checking account with my 2 sons, Rudy and Jake.All three of our names are ***** ***** the checks. Last Christmas I presented each of my sons with cas… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
My son is buying a house in Alabama and I will be paying the
My son is buying a house in Alabama and I will be paying the down payment of $60,000. If I make the check payable to the bank but am not on the loan but am on the deed (if that's permissible), will th… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Father deeded his home to 2 brothers over 5 years ago. Father
Father deeded his home to 2 brothers over 5 years ago. Father passed away in 2012. No will to probate. House sold in July 2012 for under $100,000. Old home, lived in more than 20 years. Many upgrades,… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
My brother financed the house that I owned (lived in, paid
My brother financed the house that I owned (lived in, paid mortgage etc). But this means that he legally owned the house. When we sold the house, he quit claimed the deed over to me. How do I and brot… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
my father passed away & we sold the house. the realtor told
my father passed away & we sold the house. the realtor told us this was not inheritance but income under my brothers name because the deed read "my father as to a life estate & my brother as to the re… read more
Merlo
Merlo
Tax Consultant
558 satisfied customers
I sold a rental home that I have owned for years to my ...
I sold a rental home that I have owned for years to my Nephew. The home needed repairs and was only a two bedroom, so we added a third bedroom. I sold the home for $64,000 plus what the addition and r… read more
Ed Johnson
Ed Johnson
Senior HR Consultant and Business Devlpm
Bachelor's Degree
6,994 satisfied customers
Can I transfer ownership of stock (basis $25 now worth $90) ...
Can I transfer ownership of stock (basis $25 now worth $90) to my 18 year old son without any tax consequences for me? Also, what is the basis for him when he sells?… read more
Christopher Phelps
Christopher Phelps
Sole Practitioner
Master Degree
1,180 satisfied customers
My uncle shifted the deed of his home to me on Jan ...
My uncle shifted the deed of his home to me on Jan 2006. I am in the process of selling the home. He is near death. If I sell the house after he dies no I have to pay taxes. It is like he gifted the h… read more
Christopher Phelps
Christopher Phelps
Sole Practitioner
Master Degree
1,180 satisfied customers
Our father signed over ownership of his house to my brother ...
Our father signed over ownership of his house to my brother and I about four years ago. We are selling the property to my son for 200,000.00. Do we have to pay a tax on the money?… read more
Christopher Phelps
Christopher Phelps
Sole Practitioner
Master Degree
1,180 satisfied customers
Can the taxes due on the capital gain realized by the sale of my fathe
My father bought his home in 1950 for approximately $14,000. He passed away in June at 91. He had three sons; my mother predeceased him. The house was mortgage-free. In 1995 my younger brother fell up… read more
Christopher Phelps
Christopher Phelps
Sole Practitioner
Master Degree
1,180 satisfied customers
I just sold my parents house,they are deceased, and sold ...
I just sold my parents house,they are deceased, and sold the house to my sister and I for $1.00. I want to give my two children my portion of the money split two ways. How can I do this? Also is such … read more
Christopher Phelps
Christopher Phelps
Sole Practitioner
Master Degree
1,180 satisfied customers
What are the tax consequenses if I merely Quit Claim my ...
What are the tax consequenses if I merely Quit Claim my investment property to my son as vesus a Gift Deed? Or are they the same? Is it still a "Gift"?… read more
Christopher Phelps
Christopher Phelps
Sole Practitioner
Master Degree
1,180 satisfied customers
Sale of a Home, outside of state you are a resident in
My mother and my nephew were co-owners of a cottage on a lake. My mother quick claim deeded the property to my nephew. He then sold the property (within 2 weeks of being sole owner) for $80,000.00. Ho… read more
Christopher Phelps
Christopher Phelps
Sole Practitioner
Master Degree
1,180 satisfied customers
I want to sell my residence to my son for $400K. It is ...
I want to sell my residence to my son for $400K. It is valued at $500K and is in Los Angeles. He will finance the purchase price. I have been told we can avoid the re-assesment of the property tax and… read more
Christopher Phelps
Christopher Phelps
Sole Practitioner
Master Degree
1,180 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