gift tax error

[cjv]

What is the name of your state? Michigan. I am settling my father's estate and discovered that 11 years ago when my mother died we made an error with respect to the sale of their home that was deeded to my mother and myself. It was joint tenants with rights of survivor being myself. We consulted with the family attorney who advised to deed the property back to my father who could take the one time sale of a home without worrying about capital gains etc. We did that. What I did not know at the time that in 1973 my parents had given me an 86% share in the home and filed the 709 gift tax form for the IRS. Had I know that I would not have signed over the home. My father sold the home and told me that he would put my name on other properties or get the money when he died. I agreed to this as neither myself or father remembered about the 709 and the lawyers did not check their file. What if any recourse do I have with respect to my loss of the sale of the home and or using this amount to decrease the taxable amount in my father's estate?

[LdiJ]

Originally Posted by cjv

What is the name of your state? Michigan. I am settling my father's estate and discovered that 11 years ago when my mother died we made an error with respect to the sale of their home that was deeded to my mother and myself. It was joint tenants with rights of survivor being myself. We consulted with the family attorney who advised to deed the property back to my father who could take the one time sale of a home without worrying about capital gains etc. We did that. What I did not know at the time that in 1973 my parents had given me an 86% share in the home and filed the 709 gift tax form for the IRS. Had I know that I would not have signed over the home. My father sold the home and told me that he would put my name on other properties or get the money when he died. I agreed to this as neither myself or father remembered about the 709 and the lawyers did not check their file. What if any recourse do I have with respect to my loss of the sale of the home and or using this amount to decrease the taxable amount in my father's estate?

Its even a bit more complicated than you think. YOU should have filed a gift tax return when you deeded the house back to your father. You made it a gift to him at that point.

You need to see a professional who deals with estates and estate taxes.

[cjv]

Thanks for the advice. Some one else mentioned the gift tax that I should have filled out. We have now discovered that my brother who was given a 70% share in 640 acres of land as a gift from my parents was told to sign a quit claim deed back to my parents in 1990 so that they could put the land in their trusts which they were told was the best way to handle estates etc. I fear we have been given some really bad advice by the attorney which might result in an estate tax that could have been avoided if they had stuck with the original plan.

[LdiJ]

Originally Posted by cjv

Thanks for the advice. Some one else mentioned the gift tax that I should have filled out. We have now discovered that my brother who was given a 70% share in 640 acres of land as a gift from my parents was told to sign a quit claim deed back to my parents in 1990 so that they could put the land in their trusts which they were told was the best way to handle estates etc. I fear we have been given some really bad advice by the attorney which might result in an estate tax that could have been avoided if they had stuck with the original plan.

I fear that you have. The question is whether the current estate tax that will have to be paid is greater than the capital gains taxes that you and your brother would have had to pay if you sold the gifts that you originally received....and if your parents ended up paying any gift tax on the original gifts they gave you, its quite possible that far too much tax (cummulatively) will end up being paid on the properties.

Lawyers often aren't the best sources for tax advice.

[cjv]

I should add that the family lawyer deals exclusively with estates, trusts etc and was a former CPA. Another member in their firm did the deeds and gift tax in the 1970's has since died. Our current CPA is very good and hopes to get the estate below the 2 million mark and avoid an estate tax. The gift tax was reported but I don't know if anything was actually paid at that time. The IRS will be sending me a more complete record. It is just a frustrating process to go through especially when this problem could have been easily avoided. Thanks again.