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My parents sold their farm last year and gave it to my three sisters and me via an investment account. We each got $110K in separate accounts. In turn, we each pay them $7K per year to live on.

1. Do we pay dividends and capital gains on this account as a non-retirement account (about $9.5K this for 06)?
2. Is the $7K payment deductible for me?
3. Is the $7K payment taxable for my parents?

I am getting conflicting comments from my parents tax person. He says to treat it as a retirement account and pay taxes only on money as it is removed from the account.

Any info is appreciated
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