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Author: PaulEA One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121592  
Subject: Re: Gift (update) Date: 8/20/2001 7:37 PM
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My two cents is that you have a sale of the property and you are going to have to pay the tax on your portion. The courts gave you some type of interest in the property if not tenants in common a remainder interest. If you didn't have an interest why would your signature be required to sell the property. My thought would be a gift happened at the time of the divorce because you now have an interest in that property without paying for it. In my opinion, there is no doubt a gift happened but the question is when was there a gift? If a gift occured before the sale you pay the tax and if after the sale someone else will pay the tax.

Below is the definition of a gift. I don't see a gratutious transfer happening after the sale. You are getting the money because you are legally entitled to it because of gift prior to the sale.

Regulation 25.251-1(c) The gift tax also applies to gifts indirectly made. Thus, any transaction in which an interest in property is gratuitously passed or conferred upon another, regardless of the means or device employed, constitutes a gift subject to tax.

The IRS doesn't have to follow legal title. If local law states you have an ownership interest, the IRS will follow that or if the IRS believes there is assignment of income to the father, it will use the form over substance doctrine to reallocate the income.

I would follow the CPA's advice on this one.
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