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Post by leahskyler on Dec 31, 2010 13:37:21 GMT -5
Hi all..ok..here goes..and at the risk of sounding stoopid but I really do not know the answer to this question. Next month..Jan..my uncle is giving me some money!! Yipee!! He is almost 90 and wants to give some of his assets away now. I am not going to argue or advise him. Not a good idea. So no gifting or anything like that. Here's the deal..at his request I opened up accounts with a local Smith Barney agent for uncle and myself. The paper work is signed and agent is on his accounts and will transfer them from current holding companies to his Smith Barney acct and then when that's in place..they will be transferred to my SB account. Uncle will pay any taxes due in 2012 for 2011. Do I have to declare this money any place on my 2011 1040..I know I would have to pay any gains if I don't have the money put in a tax deferred investment..and invest them I will..but do I have to pay any tax on the tranfer of the original sum? thx so much! L
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Post by activeonlooker on Dec 31, 2010 14:24:41 GMT -5
Your uncle's gift to you is not taxable to you (unless the money is from a retirement account). You are correct that you will pay tax on the income of the funds from the day you receive them.
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Post by leahskyler on Dec 31, 2010 14:51:33 GMT -5
thxs so much for the reply..there are two funds..one is a tax deferred annuity that uncle never annuitized and the other is a tax free municiple bond fund. SO in other words..there is no tax due on these funds to me by me even tho the amount is more than the allowable gifting. L
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Post by commentator on Dec 31, 2010 17:56:17 GMT -5
There are additional complications.
Uncle will likely have to file a gift tax return. Leah's basis in any non-cash assets received as a gift will have to be determined. There are probably other issues.
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Post by Savoir Faire-Demogague in NJ on Jan 5, 2011 12:11:49 GMT -5
The bigger question here is the estate planning issue that may be of more significance.
So many people engage in significant financial transactions and transfers of property without seeking competent advice from CPAs or estate planning attorney's, then later on, get pounded with unforeseen tax liabilities.
If you inherit financial assets or property, you get a stepped up cost basis. By gifting, you get the gifter's cost basis.
I may not be 100% on the nuances, which is why you must seek professional advice.
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Post by peteymit on Jan 5, 2011 13:57:10 GMT -5
If he's subject to the estate tax, any amounts he gives to you might get pulled back into his estate anyway if he passes away within three years of gifting it to you. I'm not implying that is the case here, but just something to keep in mind if the purpose is to reduce estate taxes.
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