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Subject:  re post above estate tax avoidence Date:  11/19/2009  1:02 AM
Author:  susan400 Number:  107716 of 121585

Regarding my post above. ""Estate, income tax avoidance"" Thanks to Peter, Greg, Phil Bill VKG, etc. For their replies.

Literally someone I know is thinking about doing this, I know it is nuts and risky.Not to go on an on, but maybe it is instructional for the forum. Some more detail:

A is 80, good health but apparently has developed a hatred for obsession for paying taxes, especially in the Obama era. With an objective of avoiding taxes, A is going to transfer 48 acres of developable land in Maryland to grandkid B for nothing, 1$ to make it a legal transfer.

A week or so later, they plan to make a private agreement among just the 2 of them, where B will pay A in cash $2000 a month for 15 years, amounting to $300,000 total.

- They know the basis for B will be zero.
- I think family to family means paying no or a small transfer fee.
- The 300,00 is perhaps ½ the PMV and paying over time means it is far less than the PMV
- It is unclear at death of earlier than 15 years, how this gets settled but supposedly B will then pay heirs, C an D. C is the parent of B, D doesn’t even know this is happening. If D wants to go straight and reports his 1000 as n installment sale, would that trigger things?

The objective is get the asset transferred before death to avoid inheritnce tax and avoid paying capital gains taxes as well. I know is it wrong and risky even for someone with patriotic limitations. Total estate oproior to this woul be ~ 1.4 million.

But:
+ How might it be discovered, why would the IRS even know? Do tax authorities review deed transfers?
+ If it is, A is in trouble for tax evasion-understood, could B be at risk for complicity, helping a crime of tax avoidance along? Could B claim, he didn’t know, and he can pay in cash, no crime there?
+ Will not heirs C&D have to sign off at estate settlement time saying they know of no asset than has not been included in the estate, thereby committing fraud as well?
+ If the “gift” portion is, call it 600,000, isn’t that under the lifetime gift tax threshold?

+ Are private agreements like this a common things to avoid taxes and scrutiny?
+ I assume any attorney reviewing would warn the client they are committing a crime?
Any other view there? Is the attorney liable for allowing it to happen?

Yes I agree it amounts to an annuity or it is an installment sale.
What is wrong with a private annuity? (other than here because it is tax avoidance)

Thanks in advfance for all replies to this interesting topic. I fear in this case it iss too late. Geez, I wish there WERE, better tax angles for all. !!
Susan400
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