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Any probelm if I deposit cash from gifts

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severan

New member
What is the name of your state? Florida

I withdrew $50,000 of my money gifted by my husband and parents, when my husband was hit with a lawsuit years ago, fearing the plaintiff will come after me. Finally, the case on my husband is over. Our family needs money to restart our lives and I want to deposit that cash in bank. A friend of mine working for a bank informed that the bank will fill out Form 8300 to initiate currency transaction reporting to IRS, and IRS may come after me. I have no job or income for the last 15 years. Can I get some suggestion?
 


LdiJ

Senior Member
What is the name of your state? Florida

I withdrew $50,000 of my money gifted by my husband and parents, when my husband was hit with a lawsuit years ago, fearing the plaintiff will come after me. Finally, the case on my husband is over. Our family needs money to restart our lives and I want to deposit that cash in bank. A friend of mine working for a bank informed that the bank will fill out Form 8300 to initiate currency transaction reporting to IRS, and IRS may come after me. I have no job or income for the last 15 years. Can I get some suggestion?
It is true that a deposit that big will get reported to the IRS and that the IRS may investigate. If you can demonstrate, with hard evidence where the money originally came from, that would eliminate any problems with the IRS.
 

Taxing Matters

Overtaxed Member
What is the name of your state? Florida

I withdrew $50,000 of my money gifted by my husband and parents, when my husband was hit with a lawsuit years ago, fearing the plaintiff will come after me. Finally, the case on my husband is over. Our family needs money to restart our lives and I want to deposit that cash in bank. A friend of mine working for a bank informed that the bank will fill out Form 8300 to initiate currency transaction reporting to IRS, and IRS may come after me. I have no job or income for the last 15 years. Can I get some suggestion?
Someone from Florida asked a very similar question on another site just a few days ago. I don't think I can link that thread here. However, I'll tell you what I told that person. What will happen is that the IRS will match the currency transaction report (CTR) with your return for the year in which the deposit was made and when it the match does not show any income matching the CTR the IRS will likely send you a notice proposing to add $50,000 in taxable income or audit the return and the agent will ask about the $50,000 CTR. Either way, your problem is that the IRS will be skeptical of your claim of stashing such a large amount of cash in your home for a period of years. And so will the courts, if you appeal a decision by the IRS to include that $50,000 in income (and the tax that would result). After all, it is very unusual for anyone to keep such a large amount of cash in their home (or even safe deposit box) for a period of years. That doesn't mean you can't win, but you'd need to present a pretty convincing case that the $50,000 you deposit today is the same $50,000 that you took out years ago. For that, a tax attorney is probably going to be very helpful. Even then, I cannot guarantee you'd succeed.

In that other thread, the person wanted to deposit $120,000 that she had withdrawn 9 years ago and kept in her home, and wanted to deposit it now to fund her husband's business. I discussed the applicable law on this as follows:

The CTR is evidence of possible income. That $120,000 had to come from somewhere. And without a good explanation of where it came from that would not be taxable income the IRS will assume it was from taxable income. And so will the Tax Court: "A bank deposit is prima facie evidence of income and respondent need not prove a likely source of that income." Tokarski v. Comm'r, 87 T.C. 74, 77 (1986). (In Tax Court the respondent is always the IRS.) The Tax Court will apply a different rule in those circuits where the Court of Appeals has set a different standard. However, the Tax Court applied the same presumption in a case arising out of Florida in which there was record of a bank deposit for $25,000. It started with the presumption that the funds were income, and went on to explain that it was not convinced by the taxpayer's explanation for why the funds were not taxable income:
Respondent adjusted petitioner's 1992 gross income on account of the NCNB deposit ($25,000 deposited into an account of petitioner's on February 10, 1992). In the petition, petitioner avers that all the cash transactions were from funds accumulated by petitioner from a 1990 loan to her from NCNB National Bank and from rental income received by her in prior years. On brief, petitioner argues that the source of the NCNB deposit was funds received by petitioner from her children, either as loans or gifts, as evidenced by the testimony of petitioner and her children.

Petitioner's testimony and that of her children concerning the source of the NCNB deposit conflicted on numerous points and was not credible. Petitioner's testimony was particularly unconvincing concerning the actual times, places, manner, and denominations of the supposed gifts of cash to her. Petitioner was not able to remember the details of her son's presenting her with $10,000 in cash or her daughter's presenting her with $20,000 in cash. Upon questioning by the Court, petitioner was not certain when she traveled from California to Florida with the $10,000 her son supposedly gave her and could not recall whether she received $20,000 in cash from her daughter in November 1991 or February 1992. The children's testimony seems particularly incredible given the large sums of money the children supposedly gave their mother in comparison to their modest reported incomes for the years at issue. We do not credit Gary's testimony that he kept $15,000 in $100 bills under the carpet in the closet in his apartment nor his sister Audrey's testimony that she received more than $30,000 in cash gifts at her wedding, which she kept at home, in her closet (in a safe). We observed the demeanor of petitioner and her children and do not believe that any of them told the truth with respect to the source of the NCNB deposit.

We may reject testimony that is inherently improbable or manifestly unreasonable, even where no contradictory testimony is offered. See, e.g., Bovett v. Commissioner, 204 F.2d 205, 208 (5th Cir.1953), and the cases cited therein. We accord the testimony of petitioner and her children no weight with respect to the source of the NCNB deposit. Petitioner has failed to prove her claim of a nontaxable source.
DiPierro v. Commissioner, 77 T.C.M. (CCH) 2132 (T.C. 1999).
As you can see from the case discussed above, the IRS and Tax Court were skeptical of the story told by the taxpayer about the source of the cash, and she evidently did a poor job presenting the facts, with inconsistencies hurting her case. So, to succeed, you want to make as strong a presentation as possible to back up your assertion that this is the same cash you took out years ago.
 

Taxing Matters

Overtaxed Member
It is true that a deposit that big will get reported to the IRS and that the IRS may investigate. If you can demonstrate, with hard evidence where the money originally came from, that would eliminate any problems with the IRS.
While literally true, it's not easy to do. From my own experience working for the IRS I can tell you that the agent will start out rather skeptical of this kind of situation. As I discussed above, the law puts the burden on the taxpayer to make the case that the cash was not taxable income. so it's critical to have a good presentation to succeed.
 

LdiJ

Senior Member
While literally true, it's not easy to do. From my own experience working for the IRS I can tell you that the agent will start out rather skeptical of this kind of situation. As I discussed above, the law puts the burden on the taxpayer to make the case that the cash was not taxable income. so it's critical to have a good presentation to succeed.
That is why I said that hard evidence would be needed. I do realize the difficulty. However it is not unusual for people facing lawsuits or with a judgment against them to keep larger amounts of cash at home than people without. Since its likely that she can prove the lawsuit, that ups her odds a bit.
 

Taxing Matters

Overtaxed Member
However it is not unusual for people facing lawsuits or with a judgment against them to keep larger amounts of cash at home than people without.
But keeping tens of thousands of dollars, all unspent, in a home for years is very unusual. There are other safer and more prudent ways to park that cash to try to keep it from creditors than having stacks of bills in the house.
 

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