Are the following gifts acceptable

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Are the following gifts acceptable

Postby Calm Man » Fri Dec 28, 2012 8:21 pm

CPAs in the forum may best be able to answer this, but others may know as well. Let us say a person wants to give as much as possible to Person A within the annual non-reporting limits. The "giver" gifts the yearly maximum to person A and also to another person B (it could be a spouse or non-spouse). Person B, in turn, a week later (or a month later) gifts that amount to person A. So person A in effect has gotten twice the gift limit. Is this against the rules and illegal or immoral or acceptable? Thank you.
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Re: Are the following gifts acceptable

Postby sscritic » Fri Dec 28, 2012 8:27 pm

One of those wasn't a gift. Can you tell me which one? Hint: it's the one that looks like payment on a contract (if prearranged).

If that third gift was an accident made with no knowledge of the first gift or of the intention behind the second gift, then they might all three be gifts.

Not a CPA and no desire to be one.

P.S. Can a gift have an intention? Can you hold the recipient to the stated intention? Think again back on what a contract is.

Edit: how do the words conditional and unconditional apply to gifts?
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Re: Are the following gifts acceptable

Postby JDCPAEsq » Fri Dec 28, 2012 9:14 pm

This has been discussed many times on this forum, and what you propose is known as a "step transaction" by the IRS. The courts have ruled that the IRS can ignore the various steps to determine the true nature of the transaction. If all the facts were revealed they would conclude the intermediate step was a sham.
John
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Re: Are the following gifts acceptable

Postby Calm Man » Fri Dec 28, 2012 10:00 pm

JDCPAEsq wrote:This has been discussed many times on this forum, and what you propose is known as a "step transaction" by the IRS. The courts have ruled that the IRS can ignore the various steps to determine the true nature of the transaction. If all the facts were revealed they would conclude the intermediate step was a sham.
John


Thank you ss critic and John. I guess the IRS rarely looks at 14K checks but I do recognize that this is an intent to defraud so to speak. I won't do it.
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