I have an asset (stock) that I don't want to liquidate and I need to be able to legally say that I don't personally own it on a particular day. But, I don't want to use a solution that requires tax fees. I also want this to be a legal transaction where I "gift" the asset and then revoke the gift. And, if you are concerned about ethics, the asset is for the benefit of the minor child.
2006-12-20 06:48:10 · 8 answers · asked by Coach_SCA 3 in Business & Finance ➔ Taxes ➔ United States
First off, if you 'give' anything with the intent of 'ungiving', no actual gift has occurred. I suspect the IRS will disregard the 'gift' entirely. 'Hiding' an asset in this manner almost certainly qualifies as fraud. You probably have much more to worry about from that angle than from the IRS. You need an attorney more than a tax adviser.
2006-12-20 10:18:04 · answer #1 · answered by STEVEN F 7 · 2⤊ 0⤋
Generally speaking, a gift is tax free up to $12,000. This is based on the market value at the time of the gift. The child's basis in the stock would be the cost you paid for the stock.
If it's gifted though, any income from the stock would be considered the child's, which means you may have to pay a "Kiddie Tax." The Kiddie Tax is applied on the child's unearned income (dividends and interest) and uses the parents' taxable rate. New tax laws increased the age of a "child" from 13 to 18.
However, you spoke of it being revocable, which implies a trust. Trust rules are different and require legal documentation and a separate form to be filed each year. A simple trust is generally not taxed because all income in it flows to the beneficiary who is taxed on the income. But here again, you would have to worry about the Kiddie Tax.
2006-12-20 07:55:42 · answer #2 · answered by thebaronness 1 · 0⤊ 0⤋
The tax implication of what you suggest is that you get to be a guest of the federal government for several years. What you are suggesting is fraud. As has already been said, gifts are not revocable.
Even if you stay out of jail, do not forget the "Kiddie Tax."
You say that you want to avoid tax fees. It sounds to me that is exactly what you need to incur, if you are to find a way of doing this legally. This forum is not the best place to ask these sorts of questions.
2006-12-20 10:16:10 · answer #3 · answered by skip 6 · 2⤊ 0⤋
Is this a tax question? Is there a dividend or other transaction you're trying to avoid being taxed on? If so, you're probably out of luck, as the other respondents have indicated. If you are simply trying to divest yourself of legal title without passing off the tax implications, you can use a trust.
2006-12-20 07:37:08 · answer #4 · answered by TaxGuru 4 · 1⤊ 0⤋
guess your in a pickle... The term gift means to give freely with no quid pro quo. Your term: "revoke the gift " says its not a gift at all. just a transfer of ownership and then back again. Hope you find a resolution with out exact fact here there is little one can help with on this one.
2006-12-20 07:06:18 · answer #5 · answered by Robert 2 · 1⤊ 0⤋
Whichever way you rationalise your contemplations, it is still morals and ethics! Ask the deceased Ken Lay if that is possible and the truth is just a very fine line! The price is very high knowlingly or unwittingly even if you can look yourself in the mirror.
2006-12-20 06:57:07 · answer #6 · answered by Tom Cat 4 · 0⤊ 1⤋
why dont you gift it and have your kids account reimburse you... your kid can liquidate to cover the margin call (for cash flow to yoU) and you will have market value of security
your child will pay gains at his/her tax rate rather than yours. gift must be under i believe 12k too or you will have to pay gifting tax
2006-12-20 06:59:09 · answer #7 · answered by Mets00 3 · 0⤊ 1⤋
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2016-12-01 00:25:41 · answer #8 · answered by Anonymous · 0⤊ 0⤋