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Author: Mel22345 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121565  
Subject: Gifts under 10K Date: 3/25/1999 9:47 AM
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I received the gift of a savings bond for less than 10K. When I cashed it in the bank noted the interest gained and suposedly reported the interest gained. Does this transaction need to be reported on my taxes or does it qualify as a gift under 10K and is wholly excluded?
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Author: OCM Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12862 of 121565
Subject: Re: Gifts under 10K Date: 3/25/1999 11:00 AM
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You may want to check with a tax advisor but I believe when you cash in bonds, your bank will issue a form 1099 (miscellaneous income) for the tax year in which you cash them. I believe that the person who gave you the gift realizes the gift clause, not the recipient.

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Author: AnnW Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12898 of 121565
Subject: Re: Gifts under 10K Date: 3/25/1999 7:42 PM
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Sorry, but I think YOU, as recipient, have to pay taxes on the gift. It's the GIVER that is exempt from taxes for gifts under $10,000.....
One of the "experts" here might want to confirm that, but that has always been what has happened when my parents gave me gifts in the past.... I paid the taxes, they didn't...

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Author: donovantx Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12920 of 121565
Subject: Re: Gifts under 10K Date: 3/26/1999 12:53 AM
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I don't know what the original message was, but in general a donor (the giver) who gives >$10K to any individual within a single tax year must file a gift tax return and pay gift tax. The donor is responsible for the tax. If you or anyone else gives the donor $ to pay the tax, you have made a gift to the donor. For example (and just for example), single dad gives son $90K. Tax on $80K ($90K-10K tax free) is $30K (a guess). Son gives $30K to dad to pay the tax or son pays the tax directly to the IRS. Net result: dad has made a taxable gift to son of $80K and son has made a taxable gift to dad of 20K ($30K tax-10K tax free).

Please do not rely on this advice in any way. It is a generalization and may not apply to your specific situation. Consult an experienced CPA or tax attorney.

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Author: gmanwithe Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12926 of 121565
Subject: Re: Gifts under 10K Date: 3/26/1999 8:40 AM
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I believe AnnW is mistaken. It is the giver who has to pay taxes on the gifts.

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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12980 of 121565
Subject: Re: Gifts under 10K Date: 3/26/1999 11:10 PM
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Mel22345 wrote I received the gift of a savings bond for less than 10K. When I cashed it in
the bank noted the interest gained and suposedly reported the interest
gained. Does this transaction need to be reported on my taxes or does it
qualify as a gift under 10K and is wholly excluded?
Who did they report got the interest? How did they report it? Whoever got the 1099INT pays reguired taxes on interest. Everything under 10K is Gift Tax Free to doner and recipient. Recipient NEVER reports a gift as income, or anything. Gifts are receivewd tax free contrary to other posts on this thread. If the donor paid taxes on the interest, the bond + interest is received as a gift and all tax free. Ed

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13232 of 121565
Subject: Re: Gifts under 10K Date: 3/30/1999 12:18 AM
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[[I received the gift of a savings bond for less than 10K. When I cashed it in the
bank noted the interest gained and suposedly reported the interest gained. Does
this transaction need to be reported on my taxes or does it qualify as a gift under
10K and is wholly excluded?]]

When savings bonds are gifted, the interest must be recognized by the original owner. It is treated as a disposition of the bonds. So this transaction was screwed up from the get-go. Somebody will have to pay taxes on the interest. If the person giving you the savings bonds didn't pay the interest, you are obligated to do so.

TMF Taxes
Roy

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13291 of 121565
Subject: Re: Gifts under 10K Date: 3/30/1999 11:36 PM
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[[Sorry, but I think YOU, as recipient, have to pay taxes on the gift. It's the
GIVER that is exempt from taxes for gifts under $10,000.....
One of the "experts" here might want to confirm that, but that has always been
what has happened when my parents gave me gifts in the past.... I paid the
taxes, they didn't...]]

I can't comment on your experience, Ann, but it is generally the responsibility of the DONOR (the person making the gift) to deal with any gift tax issues that may crop up. The donee (the person receiving the gift) is generally home free.

You can read more about gift tax issues in the Taxes FAQ area.

TMF Taxes
Roy

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Author: Bob78164 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13301 of 121565
Subject: Re: Gifts under 10K Date: 3/31/1999 12:04 AM
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In response to an earlier comment, TMFTaxes replied:

I can't comment on your experience, Ann, but it is generally the responsibility of the DONOR (the person making the gift) to deal with any gift tax issues that may crop up. The donee (the person receiving the gift) is generally home free.

I interject:

True, of course, but in the original post, there may have been some income generated after the date of the gift. Taxes on that income, of course, are the donee's responsibility. I wonder if that's Ann's situation. --Bob

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Author: Wavelength One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13341 of 121565
Subject: Re: Gifts under 10K Date: 3/31/1999 3:22 PM
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In response to an earlier comment, TMFTaxes replied:

I can't comment on your experience, Ann, but it is generally the responsibility of the DONOR (the person making the gift) to deal with any gift tax issues that may crop up. The donee (the person receiving the gift) is generally home free.

Bob78164 interjected:

True, of course, but in the original post, there may have been some income generated after the date of the gift. Taxes on that income, of course, are the donee's responsibility. I wonder if that's Ann's situation.


Although earnings on the gift may be an issue, I think most probably there is another misunderstanding that is causing the problem. Many people don't understand the difference between a gift given in cash, and a gift of appreciated assets. Thus, they confuse the idea of Gift Taxes, which, if applicable, are the sole responsability of the gift giver , and Income/Capital Gain Taxes, which will be due if the appreciated assets are sold upon receipt of the gift and the basis is lower than the selling price, and which are sole responsability of the gift recipient. This is largely due to a misconception that the gift is to be considered in the same manner as Estate Taxes, with the false idea that the basis of the gift is stepped up to the current value at the time of the gift (which, of course, while true of an inherited asset, is not true of one which is gifted).

To the lay person, a Tax is a Tax. The distinction between Income / Capital Gains / Gift / Estate Taxes, and the various ways that identical items may be treated under each one, is simply not well understood by most of the population.

Wavelength

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