Legal Question in Tax Law in Massachusetts

Giving gifted money

A family member has recieved settlement money and wants to gift money to family members. He doesn't want to spend a lot of money on taxes by going over the $13,000 tax exclusion.We thought if he paid off our personal bills/ credit card/mortgages and bought us things (ex. new cars, tv's ect.) instead of giving us money it would be legal and just as good as giving us money(because we would just be paying off the debt with the money anyway). Is this legal and /or is there some other way to recieve the money without him having to spend a lot in taxes.


Asked on 7/13/09, 1:30 am

1 Answer from Attorneys
JOHN TATOIAN LAW OFFICE OF JOHN A. TATOIAN ESQ.*Licensed Only in Massachusetts

Re: Giving gifted money

The discharge of another's indebtedness is included in the gross taxable income of the recipient, absent a statutory exclusion. For example, if B owes $1000 to C and A discharges B's debt to C by paying C $1000, the IRS considers this taxable income to B, unless it is excluded from gross income by statute. Even if it was a gift, and excluded from gross income of the recipient, gift taxes may apply.;))) Please feel free to contact my office for a free initial consult based on the facts of your specific situation.:))

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Answered on 7/14/09, 1:29 pm


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