Legal Question in Tax Law in California
should donee of gift notify IRS, if so how, when
two years ago, my client was given a house worth 800,000. from her very wealthy boyfriend, deed put in her name and his name as joint tenants, yet at same time he gave her a grant deed to his interest, which she later recorded. When last deed recorded change of ownership statement, which had to be signed by both, did not state 'gift' on it. Donor does not want to pay the tax until he dies. Donee wants it paid now, expects to sell property in next two years. Parties have separated and my client wants to get if behind her. SHould she notify IRS or wait until she sells house.
3 Answers from Attorneys
Re: should donee of gift notify IRS, if so how, when
He may not even owe gift tax. Much would depend on the equity in the property, and how generous he has been over his lifetime. There is generally no election to pay the tax now or defer it until death. It is due for the year of the gift, if due at all, although there are planning strategies as to when and in what amounts gifts are made. Feel free to send me a few more details at [email protected]. If you do, I'll try to give you more answers.
Re: should donee of gift notify IRS, if so how, when
Oh, one thing I overlooked mentioning. She does not have to notify IRS about anything. The responsibility for filing returns for taxable gifts and paying the tax is the donor's, not the donee's. And the IRS has a tax lien only against the "taxpayer"...that's the donor.
Re: should donee of gift notify IRS, if so how, when
Client not responsible for gift taxes, and there may never be a gift tax due. When due, it will be on the donor's remaining assets. Unless I do not know something, your client need do nothing.
Joel Selik
Ll.M.-Taxation
www.taxworkout.com
800-894-2889
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