Gifting in a community property state

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Edmonds_investor
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Joined: Sat Jun 23, 2018 3:45 pm

Gifting in a community property state

Post by Edmonds_investor » Sat Jun 23, 2018 11:35 pm

Does a couple living in a community property state (e.g., WA) automatically have gifts given to others (e.g., children) considered to be gift-split between husband and wife by the Federal Government?
e.g., can the husband gift $30k (and the wife count as having gifted zero) to a child? Or will this necessarily be considered to be a gift of $15k by the husband and $15k by the wife?

Tachyon
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Re: Gifting in a community property state

Post by Tachyon » Sun Jun 24, 2018 5:54 am

It's $15K per person per year by an individual. Can give $30K to a person per year if combined with spouse. To my knowledge, being in a community vs common law state doesn't change the situation.

kaneohe
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Re: Gifting in a community property state

Post by kaneohe » Sun Jun 24, 2018 7:44 am

viewtopic.php?f=2&t=252389&newpost=3987 ... ead#unread

see the 709 instructions in your other thread. ....the wording is whether it is community property, not whether it is in a community property state.......tho it's usually the same, I suppose you can have separate property in a community property state.

47Percent
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Re: Gifting in a community property state

Post by 47Percent » Sun Jun 24, 2018 9:29 am

My non-lawyer non-cpa understanding is that any any spend/gift in a community property state from a co-mingled account is treated just like a joint account. That is to say, either of the parties can spend it the way they want while the marriage is effective.

So, if $30K is gifted, they can deem it is from one person OR from both 50/50; If considered split 50/50, then no 709 is necessary as it falls at or below the exemption. If you would like to treat it as gifted by one person (not split), then file 709 to that effect. In the former case you can file explicit elections of gift splitting, just to be sure.

I have to admit, I don't quite understand why you would want it to be treated as coming from one person.

If the gift is more than $30K, a 709 is of course mandatory.

bsteiner
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Re: Gifting in a community property state

Post by bsteiner » Sun Jun 24, 2018 9:38 am

kaneohe wrote:
Sun Jun 24, 2018 7:44 am
... I suppose you can have separate property in a community property state.
You can. You can also have community property in a common law state (for example, if a couple moves from California to New York).

Edmonds_investor
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Joined: Sat Jun 23, 2018 3:45 pm

Re: Gifting in a community property state

Post by Edmonds_investor » Sun Jun 24, 2018 12:40 pm

Thanks, 47. I did not see this reply before I wrote in the other thread.

The reason I am thinking a one-person gift is better is because then I don't have to worry about contribution limits the following 4-5y for my wife.
If we could contribute $150k all this year, we would. But we do not have this much on hand.
But, if I can maximize my contribution at $75k this year (for the same child), then my wife can kick in with a full $75k next year.

This is messier (and more constrained) if everything is considered gift-split, but it sounds like you don't believe this is mandatory.

47Percent
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Re: Gifting in a community property state

Post by 47Percent » Sun Jun 24, 2018 1:00 pm

Edmonds_investor wrote:
Sun Jun 24, 2018 12:40 pm
Thanks, 47. I did not see this reply before I wrote in the other thread.

The reason I am thinking a one-person gift is better is because then I don't have to worry about contribution limits the following 4-5y for my wife.
If we could contribute $150k all this year, we would. But we do not have this much on hand.
But, if I can maximize my contribution at $75k this year (for the same child), then my wife can kick in with a full $75k next year.

This is messier (and more constrained) if everything is considered gift-split, but it sounds like you don't believe this is mandatory.
Have you considered $75K this year, split 50/50, and another $75K next year, again split 50/50. This would max out both of your exemption for that beneficiary for years 2,3, 4, and 5. The five year spread out decision is not just a one-time option.

Edmonds_investor
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Re: Gifting in a community property state

Post by Edmonds_investor » Mon Jun 25, 2018 2:31 am

Yes, 47, I now see. Took me some time, but I finally understand.

The key is just to watch the cumulative sum of the 5y averages for all of the gifts during overlapping years. This should never exceed 15k for a gifting individual—or twice that for a gifting couple. The last year of the last gift a single top-off can be performed, and then it can start all over again with a clean slate.

Thanks again!

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