automaticslim wrote:
I have nothing to add to this conversation except that "gift" is not a verb.
According to Merriam-Webster, you are incorrect. Look at second set of definitions
http://www.merriam-webster.com/dictionary/giftautomaticslim wrote:
I have nothing to add to this conversation except that "gift" is not a verb.
According to Merriam-Webster, you are incorrect. Look at second set of definitions
http://www.merriam-webster.com/dictionary/giftRich people's problems. Tears and prayers...
automaticslim wrote:
I have nothing to add to this conversation except that "gift" is not a verb.
POTD
beancounter wrote:
$30K is a lot to scrounge up in one day.
It shouldn't be.
My tax guy called with bad news also. Had to pay 12k. I was already expecting 10k. I buy and sell houses so I never know what my taxes will end up. Very hard to know how much quarterly payments to make.
This is horribly wrong. If you make a gift and its FMV (less your annual exclusion) exceeds your available lifetime exemption, you owe gift tax.
Hate the IRS wrote:
Exactly. I was happy to pay my fair share, it just sucks when you make an honest attempt to plan and it all goes horribly wrong nonetheless. Needless to say, I am looking into a new accountant (even though my accountant is very good, but the mistake is a little disconcerting).
You must be a libtard, "happy to pay my fair share..."
CPA wrote:
This is horribly wrong. If you make a gift and its FMV (less your annual exclusion) exceeds your available lifetime exemption, you owe gift tax.
What I posted was correct. A gift of a house is not going to generate gift tax, especially when the known tax liability is approx. $30K.
My Tax day nightmare is that my tax dollars go to support planned parenthood which love to kill people. It should be a nightmare for all of us. That's why that planned parenthood thread makes me sick.
A few years ago my wife (who makes way more than I do) was having close to $0 taken out of her check for federal taxes because of some error at work that she never noticed. We ended up with a huge tax liability along with penalties that year.
You are not making any sense and must be clueless. An individual has a limited amount of value they can gift during their lifetime before they start to incur gift tax. Right now we all have a federal lifetime exemption of $5.45M (some states also have a gift tax). So, if I gift a house and it has a value of $1M to my son, then I need to report that gift on a gift tax return (IRS Form 709). If I have never made any gifts before, I would have to deduct $986,000 ($1M less $14,000 annual exclusion) from my lifetime exemption of $5.45M. Once I make gifts of anything (stock, my home, cash, etc), that exceed my lifetime exemption, I owe tax on the excess at approximately 40%.
At which part in this example are you paying tax?
someone1 wrote:
A few years ago my wife (who makes way more than I do) was having close to $0 taken out of her check for federal taxes because of some error at work that she never noticed. We ended up with a huge tax liability along with penalties that year.
same here. found out the hard way (my own fault for not checking my stubs...) that I didn't have the taxes I thought coming out of my pay.
You pay tax once your cumulative lifetime gifts exceed your available exemption. In today's environment of a $5.45M exemption, you start to owe gift tax once your lifetime gifts exceed $5.45M. For example, if I have never made a previous gift that I had to report and now make a gift of $6M in cash to someone - I owe a 40% tax on $550K of $220K.
I hear you, but you must be a very green CPA. The OP's father owes no gift tax nor would anyone gifting an asset with a built-in ~$200K gain. I make a decent living taking clients from public accountants that provide advisory like yours. Maybe add something constructive to this thread?
The thing we see regularly is similar to this (the OPs dilemma). Folks will sell a home or make a large distribution from a deferred tax account (IRA/401K) just to move the money somewhere else. Still savings in their mind. IRS sees this as a taxable event leading to...a $30K tax bill. Client freaks. Understandable but if you use a CPA to prepare your tax work maybe spend 5min with a phone call prior to a $100,000+ transaction to sidestep these potential problems.
Agree that the OP's father likely didnt owe any gift tax. But my point is that someone could very easily make a gift of an asset with a built-in gain which causes a gift tax.
If the OP's father had previously made substantial gifts over the years, his gift could have triggered a gift tax no matter his cost basis. For example, if OP's father had made previous taxable gifts of $5M, and then gifts a piece of real estate to his son with a FMV of $1M - that will result in the father owing gift tax no matter his cost basis in the real estate.
What did the IRS have to do with this mistake?
someone1 wrote:
A few years ago my wife (who makes way more than I do) was having close to $0 taken out of her check for federal taxes because of some error at work that she never noticed. We ended up with a huge tax liability along with penalties that year.
Her fault entirely. How do you not notice that your gross is almost the same as your take home income? In most states your take home is going to be 79.5-80% of your gross income. Anyone who doesn't recognize this right away does not understand tax theory.
Also, "some error at work that she never noticed" was her filling out her W-4 wrong for her circumstances. Don't blame the rest of the world. There also would not be penalties unless you did not pay the tax you owed on time.
Also, you would not have had to come up with the money in one day if you had provided your CPA with the tax return materials 3 months ago for the house that you sold a year ago.
Hate the IRS wrote:
Exactly. I was happy to pay my fair share
A fair share would be zero.