Depositing Cash if it was gifted?

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dknightd
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Re: Depositing Cash if it was gifted?

Post by dknightd » Fri Oct 19, 2018 7:50 pm

Either you, or your grandmother, should take these bills to an expert. Some of them might be worth more than face value. Leave them a couple of bills for their trouble. Take the rest to the bank. Smile and be happy!

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willthrill81
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Re: Depositing Cash if it was gifted?

Post by willthrill81 » Sat Oct 20, 2018 10:06 am

ResearchMed wrote:
Thu Oct 18, 2018 8:16 pm
LITeacher wrote:
Thu Oct 18, 2018 8:00 pm
Hi all,

My grandfather recently passed away in July. He was 94 years old, a month from 95, and he left my grandmother almost $70,000 in cash that she did not know about (I mean literal $20 and $100 bills). My grandmother wants to gift me and her other grandsons $10-$15K each of it.

My question is -- since it is a gift, I'm assuming there are no tax implications.

However, would this red flag me for an audit if I were to deposit it? I'm a teacher and my wife is in marketing - we're both fairly boring from a tax perspective (both W-2 employees), but I'm worried that if I deposit the money, I will have a higher chance of being audited. I have nothing to hide, but I've had friends who have been audited before, and it looks like it is quite a bit of time consuming work that I would preferably rather not deal with (would my 93 year old grandmother have to fill out any type of form so I prove that I got it from her?).

My other option is to put it in a safety deposit box and just try to spend it down?

Does anyone have any opinions on this? I'm assuming my grandmother can't even prove that this $70,000 was taxable income of hers since she doesn't even know how long my grandfather was saving this in the shoe box in their apartment - some of the $100 bills look like they are from 80 years ago -- I haven't even see some of these prints before. They're not in great condition or I'd look if they were worth anything just for being old.
Someone can gift to another person up to $15k per year, with no tax consequences to either party.
IF the amount is more than that in any single year, then a tax *form* would need to be filed, but for most people of less than major wealth, there would not be any taxes due later, either. (Currently, for Federal taxes, each person can gift a total of approx $11M (that's "million") during a lifetime or as part of the estate, before Federal estate taxes kick in. That might change to closer to $5M in a few years, still not worth any worry for most of us.)
Yes, people tend to think that all gifts over $15k in a single year to a single entity are taxable, but this is false. Gifts over that amount merely count toward your lifetime exemption.
What happens if you make a total of $120,000 in gifts to your daughter in one year? Then you will have made a taxable gift to your daughter equal to $105,000 in 2018—$120,000 less the $15,000 annual exclusion.

That $105,000 will reduce your 2018 lifetime exemption from $11.18 million to $11,179,895.

Taxable gifts must be reported to the IRS on Form 709, the United States Gift (and Generation-Skipping Transfer) tax return. The return is due on the same date as your personal income tax return, April 15 of the year after the year in which the taxable gifts were made. This is how the IRS keeps track of how much of your lifetime exemption you've used up.
https://www.thebalance.com/gift-tax-exc ... on-3505656
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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linenfort
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Re: Depositing Cash if it was gifted?

Post by linenfort » Sat Oct 20, 2018 3:31 pm

So far my takeaway from this thread is:

(1) Don’t make multiple deposits of less than $10,000 as it looks like (and is) circumventing reporting.
(2) Don’t deposit the whole sum either, even though plenty of posters are confident that it is ok to do so.

How does a cash business deal with this issue? Is the fact that they’re registered as a certain kind of business generally enough to protect them? For example, a food truck.
(Yes, even some legit cash businesses fall into trouble, but those are outliers).

Would the OP be able to fund large gift cards with cash, or is that every bit as dangerous as multiple bank deposits? Probably so. Just asking.

It seems like having a large amount of cash is a burden even when it’s legally obtained.
bogleheads, don't knock state lotteries. They helped defund the mafia.

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dm200
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Re: Depositing Cash if it was gifted?

Post by dm200 » Sat Oct 20, 2018 4:23 pm

linenfort wrote:
Sat Oct 20, 2018 3:31 pm
So far my takeaway from this thread is:
(1) Don’t make multiple deposits of less than $10,000 as it looks like (and is) circumventing reporting.
(2) Don’t deposit the whole sum either, even though plenty of posters are confident that it is ok to do so.
How does a cash business deal with this issue? Is the fact that they’re registered as a certain kind of business generally enough to protect them? For example, a food truck.
(Yes, even some legit cash businesses fall into trouble, but those are outliers).
Would the OP be able to fund large gift cards with cash, or is that every bit as dangerous as multiple bank deposits? Probably so. Just asking.
It seems like having a large amount of cash is a burden even when it’s legally obtained.
A business or organization that does a lot of larger cash deposits and/or withdrawals can usually file a form with the bank or credit union that will exempt them from being reported on the CTR.

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DanMahowny
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Re: Depositing Cash if it was gifted?

Post by DanMahowny » Sat Oct 20, 2018 4:39 pm

linenfort wrote:
Sat Oct 20, 2018 3:31 pm
It seems like having a large amount of cash is a burden even when it’s legally obtained.
Best sentence in this thread.
Funding secured

MnD
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Re: Depositing Cash if it was gifted?

Post by MnD » Sat Oct 20, 2018 5:36 pm

I was paid cash for a used car and deposited something like $8K in cash. Zero issues - deposit took about 15 seconds - he had some kind of bill counter. I did not get the evil eye and the clerk was not pulling out Treasury report forms from under the counter as I walked away. :mrgreen:

If it was me I'd deposit $9K, buy a smallish home safe and have a nice stash of walking around cash at my beck and call till it was used up.
The OP said $10-15 K so we might be talking about a whopping $1K here in cash to spend after a $9K deposit.
Costco seems especially friendly for going through fat wads of cash - I see people making big cash purchases there all the time.

Spirit Rider
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Re: Depositing Cash if it was gifted?

Post by Spirit Rider » Sat Oct 20, 2018 6:26 pm

I don't know why people still think it is a problem to deposit >= $10K in cash. It most definitely will generate a CTR. However, do you realize that there are > seven figures of CTRs every year? It is a non-issue for the vast majority of people.

If you have not already been flagged for automatic review or become subject to an investigation. Nobody will even care about the CTR. On the other hand, if you are a drug dealer, it may be a little more problematic.

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dm200
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Re: Depositing Cash if it was gifted?

Post by dm200 » Sun Oct 21, 2018 12:30 pm

Spirit Rider wrote:
Sat Oct 20, 2018 6:26 pm
I don't know why people still think it is a problem to deposit >= $10K in cash. It most definitely will generate a CTR. However, do you realize that there are > seven figures of CTRs every year? It is a non-issue for the vast majority of people.
If you have not already been flagged for automatic review or become subject to an investigation. Nobody will even care about the CTR. On the other hand, if you are a drug dealer, it may be a little more problematic.
Yes - not a big deal for a CTR to be generated. If you do so, do not act "suspicious" and, if asked, have a reasonable explanation for the "cash".

Cheyenne
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Re: Depositing Cash if it was gifted?

Post by Cheyenne » Mon Oct 22, 2018 7:10 am

After reading this thread one might conclude that doing business with a bank today could result in:

1. making you the subject of a criminal investigation and possibly a convicted felon.
2. making you a victim of theft by having you money taken from you.

Remarkable

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vineviz
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Re: Depositing Cash if it was gifted?

Post by vineviz » Mon Oct 22, 2018 7:17 am

Cheyenne wrote:
Mon Oct 22, 2018 7:10 am
After reading this thread one might conclude that doing business with a bank today could result in:

1. making you the subject of a criminal investigation and possibly a convicted felon.
2. making you a victim of theft by having you money taken from you.

Remarkable
I hope most people knew that those were possibilities before they read this thread. If not, I suppose this conversation was useful to them.

On the other hand, I hope that most people know that those possibilities are infinitely more likely to impact you if you were doing something illegal BEFORE you walked into the bank.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

typical.investor
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Re: Depositing Cash if it was gifted?

Post by typical.investor » Mon Oct 22, 2018 7:22 am

Cheyenne wrote:
Mon Oct 22, 2018 7:10 am
After reading this thread one might conclude that doing business with a bank today could result in:

1. making you the subject of a criminal investigation and possibly a convicted felon.
2. making you a victim of theft by having you money taken from you.

Remarkable
Surreal is the word I'd use.

Still, it's the bad people I blame and not the banks.

And it's not just banks...https://en.wikipedia.org/wiki/Civil_for ... ted_States

JackoC
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Re: Depositing Cash if it was gifted?

Post by JackoC » Mon Oct 22, 2018 5:26 pm

linenfort wrote:
Sat Oct 20, 2018 3:31 pm
1. So far my takeaway from this thread is:

(1) Don’t make multiple deposits of less than $10,000 as it looks like (and is) circumventing reporting.
(2) Don’t deposit the whole sum either, even though plenty of posters are confident that it is ok to do so.

2. Would the OP be able to fund large gift cards with cash, or is that every bit as dangerous as multiple bank deposits? Probably so. Just asking.
1. I think the consensus is much more (1) than (2), for good reason. (1) is asking for trouble, even if the govt is unlikely to give it to you under the current, revised, enforcement policy (mentioned above) without some other crime involved. If you read the statute posted before (but here's another link) it's hard to see how (1) isn't violating it.
https://www.law.cornell.edu/uscode/text/31/5324

With (2) people are just noting that we don't live in a utopia and the govt has abused civil forfeiture laws. I don't think any reasonable person thinks that happens on a significant % of cash deposits over $10k but the risk is not zero.

2. the second part of the statute:
"No person shall, for the purpose of evading the report requirements of section 5331 or any regulation prescribed under such section—
(1) cause or attempt to cause a nonfinancial trade or business to fail to file a report required under section 5331 or any regulation prescribed under such section"
If you want to be strict, you could argue that buying several $2k gift or prepaid cards with $10k+ cash is also 'structuring' since merchants are also supposed to report single or multiple related cash transactions >$10k, those are related, but you're causing them not to file by splitting it up.

But if I got a $15k windfall I would deposit maybe $7 or $8k, hold the rest to spend as normally. I don't normally buy big gift cards unless playing games with credit card rewards but if I thought it was a reasonable facilitation of normal spending to spend some of the remaining cash on gift cards, I wouldn't worry about it. I don't think there's high risk in depositing >$10k and triggering a report, mainly I think it's none of their business so I would avoid it in what I believe is a legitimate way. If it was $70k I don't spend cash *that* fast, so I'd deposit most of it, trigger the report, and answer any inquiry.

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Ged
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Re: Depositing Cash if it was gifted?

Post by Ged » Mon Oct 22, 2018 5:50 pm

Doom&Gloom wrote:
Thu Oct 18, 2018 11:01 pm
This thread might be much more helpful to OP if everyone who is offering advice would volunteer how many cash transactions of $5000+ they have personally made in the past ten years rather than speculating about something with which they have no experience or in-depth knowledge.
I have made one such deposit. My father had about $20,000 in a filing cabinet in his home when he passed away. As executor it was my duty to secure that money, so I rented a safe deposit box at a local bank until the estate bank account was created. At that time I deposited the money in this account. When the estate was settled that money along with the rest of the estate assets were distributed to the beneficiaries by wire transfers. I received no inquiries from government agencies about this.

The only thing that made me nervous was the stories about police stopping people and confiscating any large amounts of cash they were carrying on the theory that this cash is illicit, say perhaps from drug sales. Fortunately that did not happen.

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Re: Depositing Cash if it was gifted?

Post by OnTrack » Sun Nov 04, 2018 1:17 am

BTW, a former Speaker of the House (United States House of Representatives) pled guilty to a felony structuring charge in 2015 and he received a sentence of 15 months in prison, two years' supervised release, and a $250,000 fine. In this case he was making withdrawals. He had lied to the federal agents about the purpose of the withdrawals which led to his prosecution. He had already been investigated by the FBI for other reasons for several years before the structuring was investigated. The amount of the cash withdrawals was $952,000.

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