The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Avoiding gift tax via a Corporation||Date: 6/29/2006 2:19 AM|
|Author: ptheland||Number: 87598 of 121110|
Gifts are not taxable income to you no matter how large they are. So you don't have a concern about receiving more than $12k in a year.
Gift taxes would be a consideration for the giver - your parents. If they give more than $12k per person per year, they have to file a gift tax return. They probably won't have to pay any tax unless they've been quite generous in the past, as there is a $1 million lifetime exclusion from gift taxes.
If your parents now have a sizeable estate, they may want to give the money away so that any appreciation in the money escapes estate taxation. And since the $1 million gift tax exclusion is a part of the $2 million estate tax exclusion, it can make sense to use that up now instead of waiting until their demise.
If your parents don't have an estate in excess of $2 million, it really doesn't matter if they give the money to you now and have to file a gift tax return. It's just a little bit of paperwork and won't actually generate any taxes that must be paid.
Most of this is way beyond DIY planning. They (and perhaps you) should probably talk to a professional familiar with estates and planning for them.
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