Gift tax consequences

[jlcl]

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

Mom wants to help pay for a down payment for a house for her eldest daughter. She plans to give $12k each to her three other children and her husband and have them each give $12k to the eldest daughter (so to give a total of $48k). Since Mom has a $12k annual gift tax maximum for each person, Mom should be free from gift tax and reporting the transactions to the IRS. What about the daughter who received $48k in cash. Does the recipient of the gifts have any tax implications?

[cyjeff]

Originally Posted by jlcl

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

Mom wants to help pay for a down payment for a house for her eldest daughter. She plans to give $12k each to her three other children and her husband and have them each give $12k to the eldest daughter (so to give a total of $48k). Since Mom has a $12k annual gift tax maximum for each person, Mom should be free from gift tax and reporting the transactions to the IRS. What about the daughter who received $48k in cash. Does the recipient of the gifts have any tax implications?

You mean, besides the willful defrauding of the tax man?

Mom is trying to play fast and loose with the tax laws... and sis is going to have to explain where that money came from... and then, the people that gave it to her are going to have to explain where THEY got it.

This is a really bad idea.

[tranquility]

This is a really bad idea.

Aka, a felony.

The tax return is not that complex for a simple cash gift. Look at the form, do things without trickery or deceit and either fill out the form or get a tax preparer to do so.

[Nativity]

This is also a double post, apparently the OP didn't like the answers on the other thread and now are hoping we are all senile.

[url]http://forum.freeadvice.com/tax-law-12/minor-gift-parents-435015.html[/url]

[xylene]

She cannot direct what others do with their gift or else it is not a gift.

[LdiJ]

Originally Posted by jlcl

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

Mom wants to help pay for a down payment for a house for her eldest daughter. She plans to give $12k each to her three other children and her husband and have them each give $12k to the eldest daughter (so to give a total of $48k). Since Mom has a $12k annual gift tax maximum for each person, Mom should be free from gift tax and reporting the transactions to the IRS. What about the daughter who received $48k in cash. Does the recipient of the gifts have any tax implications?

There is never tax for the receiver of a gift.

Mom has a 1 million lifetime exclusion for gifting. Therefore if she directly gives her daughter 48k, she will have to file a gift tax return, but there will be no actual tax for her unless she has exceeded her 1 million lifetime exclusion for gifting.

Its not that big of a deal to file a gift tax return if you have not exceeded your lifetime exclusion.

Yes, she is playing fast and loose with the tax laws if she does it the way that she plans, which would be foolish and unnecessary.

However, she could structure it as a loan, and forgive 12k per year of the interest and principal, until its all forgiven, but she would have to report and pay tax on the interest income.