Pass-Through Giving

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cgrinst1
Posts: 3
Joined: Sun Jan 15, 2017 2:31 pm

Pass-Through Giving

Post by cgrinst1 » Sun Jun 18, 2017 12:59 pm

I know that my wife and I can each give $14,000 tax-free per year to our child without it counting against the lifetime exclusion. We can also each give $14,000 tax-free per year to my brother and his wife (who don't need the money). So suppose my wife and I each give $7,000 tax-free to each of my brother and his wife. Can my brother and his wife then give this $28,000 tax-free to our child?

jebmke
Posts: 6655
Joined: Thu Apr 05, 2007 2:44 pm

Re: Pass-Through Giving

Post by jebmke » Sun Jun 18, 2017 1:01 pm

I believe this is what is called a step transaction. If so, the IRS would consider it a gift from you to your children.
When you discover that you are riding a dead horse, the best strategy is to dismount.

RudyS
Posts: 737
Joined: Tue Oct 27, 2015 10:11 am

Re: Pass-Through Giving

Post by RudyS » Sun Jun 18, 2017 8:09 pm

jebmke wrote:I believe this is what is called a step transaction. If so, the IRS would consider it a gift from you to your children.
That's right. Many Google hits for step transaction irs will provide lots of details.

Gill
Posts: 3500
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: Pass-Through Giving

Post by Gill » Sun Jun 18, 2017 8:17 pm

Yes, this has been discussed frequently and at length in numerous threads. It violates what is known as the Step Transaction Doctrine. Quite sinply, the IRS will ignore the intermediate steps and treat the transaction for its real intent.
Gill

JGoneRiding
Posts: 964
Joined: Tue Jul 15, 2014 3:26 pm

Re: Pass-Through Giving

Post by JGoneRiding » Sun Jun 18, 2017 10:12 pm

Omg do people never search! We just went through this last month. Exact same topic. And I think Gill gave the exact same answer!

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