Gifts Between Father & Son

A father gives his son his 50% share of a partnership that he has with his son. The father's partnership interest is worth $75,000. His father will only give his son his share of the partnership if his son gives back a plot of land the father gave him several years ago as a gift, now worth $100,000. Question - Can the gifts be consolidated so that the son reflects a gift of $25,000? Or, are 2 gift tax returns required, one for each asset transfered?

If the transactions are conditional, what is involved is not a gift, but a sale, to the extent of the trade in the eyes of the IRS. Each sells $75,000 of property and pays the tax, if any, and the gift is then $25,000. Not usually the way to go - unless the properties qualify for a tax free sale or a Starker exchange.



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