The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: re post above estate tax avoidence||Date: 11/19/2009 10:22 AM|
|Author: synchronicityII||Number: 107721 of 124598|
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.
My understanding is that the transfer would be "legal" even if it were for no money at all. However, that doesn't change the TAX implications, which is that an asset is being transferred to someone for far FAR less than market value.
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.
Step transaction doctrine. IRS finds out this gets integrated into the previous transaction. And there's fraud, which is always fun.
- They know the basis for B will be zero.
Which makes it phenomenally stupid given their intended goal.
- I think family to family means paying no or a small transfer fee.
No, that's not the case. Only time it's the case is in a transfer to one's spouse. Related or not, it's either payment for services (income to recipient) or a gift. Doesn't matter if you give the property to your son or your garbageman.
(I'm using "your" in the general sense, as I understand YOU aren't doing this)
There's also potential GST tax issues with transfers to grandkids. In fact, they're taking something that would otherwise have almost no issues and totally screwing it up, for no good reason.
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.
Then, with all due respect, they're paranoid morons. They're apparently too damn stupid or have convinced themselves that Obama's comin' to get 'em that they haven't bothered to look at the ACTUAL LAW. The current lifetime federal estate tax exemption is $3.5 MILLION, so there would be NO FEDERAL ESTATE TAX on an estate of 1.4 million, and ass