If a family member likes to give you let's say 50,000$ is a personal gift better or investing in your corporation? As I started a company, what way is better & less tax costly? Thanks.
2007-04-15 16:03:24 · 7 answers · asked by Stella V. 1 in Business & Finance ➔ Taxes ➔ United States
Depends on better for whom!
If I am giving you money for an investment or to start a business, then I'd want stock in the business or a loan to have you pay me back with interest.
You can receive ANY amount of money as a gift TAX FREE. Tax Free, to YOU that is. Gift givers pay tax (or have to use up some of their lifetime gift tax exemption) if an individual gifts you more than $12,000 per year. That's Mom and Dad can each give you $12K without a liability on their part.
If Mom & Dad each gift you $12K on Dec 31, 2007 and again on Jan 1, 2008, they legally have avoided a taxable event.
Structuring capital transactions to avoid the $10K reporting limit IS ILLEGAL (for those above me that made that bad advice)
- A Damn Fine Tax Advisor
2007-04-15 16:09:27 · answer #1 · answered by WealthBuilder 4 · 0⤊ 1⤋
Just to add to the above correct advice, if you sell them stock in your company there is NO gift involved. It's an investment on their part, NOT a gift to you, and therefore no Gift Tax return is required regardless of the amount of $$$ involved. If the venture is a success they can sell their shares of stock to you and pay capital gains tax on any gain, if any. And if it goes bust, they can take a loss on the investment, albeit only $3,000 per year against ordinary income but it's better than PAYING the tax man!
2007-04-15 16:17:15 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
definite, they look an instant double-taxation. There are 3 "wealth move taxes" suitable at the same time: --the valuables tax --the present tax --the era-skipping tax The very last 2 were designed FOR NO different reason than to avert dishonest on the valuables tax. The earnings you take advantage of to get carry of wealth for the time of your life are taxed at the same time as earned. Why could they be taxed a 2d time once you die? (As of 2011, your position tax will be 55%. George W. Bush signed a regulation that thoroughly eliminated all 3 of them. That regulation expires on the proper of 2010.)
2016-12-04 02:40:41 · answer #3 · answered by younan 4 · 0⤊ 0⤋
If they invest in your company, they wouldn't have to file a gift tax return. If they give you $50K as a gift in one year, they would.
2007-04-15 16:14:52 · answer #4 · answered by Judy 7 · 1⤊ 0⤋
If you are married and the giver is married the husband can give you $12,000 and your spouse another $12,000 then the wife can give you $12,000 and your spouse $12,000 for a total of $48,000 tax free to them in a given year. If they want to give more they will have to pay taxes. That is how my husband and I gave to my sister and her husband.
2007-04-15 16:20:35 · answer #5 · answered by scarlettt_ohara 6 · 0⤊ 0⤋
I'd do it as a personal gift, in increments under $5000 each, so as to keep from having a paper trail. (Banks have to report transactions over $5k.) After all, your relative has already paid taxes on that income, so why should you??? Stay under the "radar".
2007-04-15 16:07:35 · answer #6 · answered by Anonymous · 0⤊ 3⤋
can give up to ten grand a year, no penalties. anything over is checked
2007-04-15 16:06:23 · answer #7 · answered by Anonymous · 0⤊ 3⤋