Foreign gifts

[samdbtto]

What is the name of your state (only U.S. law)? IL

I have sent cash to Panama where I have relatives (in-laws), specifically to my father in law. He has started a dairy cow operation and I had sent him money to help purchase additional dairy cows for his business. It has started to become very successful for him and he is going to be sending money back to us. My question is can claiming these transactions as foreign cash gifts be legal, or does this have to be claimed as income and be viewed as an investment? The money sent back will exceed what we sent him.

Thank you in advance for any insight on this.

 

[HomeGuru]

What is the name of your state (only U.S. law)? IL

I have sent cash to Panama where I have relatives (in-laws), specifically to my father in law. He has started a dairy cow operation and I had sent him money to help purchase additional dairy cows for his business. It has started to become very successful for him and he is going to be sending money back to us. My question is can claiming these transactions as foreign cash gifts be legal, or does this have to be claimed as income and be viewed as an investment? The money sent back will exceed what we sent him.

Thank you in advance for any insight on this.

**A: is he sending you money back as a loan repayment and profit? That is what it appears to be. What was the agreement that you have with him? The IRS may not allow the "gift" scenario. Do you own any cows or any part of the business operation?
How much $$$ did you send him in total and during what time period?

 

[tranquility]

See a tax professional. You will need to bring all the documentation and facts to him for a determination. If you are talking about any serious amount of money, you might need a tax attorney to make sure your conversation is protected by privilege. If you are considered to have ownership or control of some foreign entity or assets, and have not reported it, you may have committed a crime. The you made a "gift" but then they are "gifting" you back is probably not going to fly. But, see someone who has access to all the facts to be sure.

 

[HomeGuru]

That's the gifting issue I was trying to allude to.

 

[LdiJ]

See a tax professional. You will need to bring all the documentation and facts to him for a determination. If you are talking about any serious amount of money, you might need a tax attorney to make sure your conversation is protected by privilege. If you are considered to have ownership or control of some foreign entity or assets, and have not reported it, you may have committed a crime. The you made a "gift" but then they are "gifting" you back is probably not going to fly. But, see someone who has access to all the facts to be sure.

I don't think its that complicated. He loaned money to relatives, they are paying him back with interest. He reports the interest as income, describing it as interest on a loan to relatives.

 

[samdbtto]

About 5000 was sent, I did not include it in my tax returns as a gift, and was ignorant to it at the time. I own nothing and have no accounts in Panama. He owns everything and he maintains his business on his own.

It was about a year ago. I have not received any money and will not anytime soon. The agreement was we helped family out with a down payment for loan. Now it seems his operation is becoming very successful and will continue to grow, in a few years when we go to buy a house, he would like to help us out. Hypothetical he sends us a lump sum to help pay the house say 20-30k, are we stuck paying taxes because gave him some money 4 years prior? Should I correct my 2012 taxes showing the gift?

 

[LdiJ]

About 5000 was sent, I did not include it in my tax returns as a gift, and was ignorant to it at the time. I own nothing and have no accounts in Panama. He owns everything and he maintains his business on his own.

It was about a year ago. I have not received any money and will not anytime soon. The agreement was we helped family out with a down payment for loan. Now it seems his operation is becoming very successful and will continue to grow, in a few years when we go to buy a house, he would like to help us out. Hypothetical he sends us a lump sum to help pay the house say 20-30k, are we stuck paying taxes because gave him some money 4 years prior? Should I correct my 2012 taxes showing the gift?

That might be able to be characterized as two separate gifts. One gift that you made to him (which was well under the limit for reporting gifts, therefore it did not need to be reported) and one gift that he will make to you.