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Financial Planning / Tax Strategies


Subject:  Re: re post above estate tax avoidence Date:  11/19/2009  10:22 AM
Author:  synchronicityII Number:  107721 of 124658

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)