4 ms·

In fact, neither of those is illegal. You’d have to be fairly wealthy and incredibly generous to actually trigger conditions needed to pay taxes on gifts. Asid

In fact, neither of those is illegal. You’d have to be fairly wealthy and incredibly generous to actually trigger conditions needed to pay taxes on gifts. Aside from being able to give $15K per person per year (or twice that for married couples) you also get a lifetime gift-giving exemption of nearly $12 million for any gift giving over the annual amounts. You’re also allowed to sell your kid your car for $1. It’ll probably be counted as a gift of market value - $1. Your kid will probably be required to pay taxes on it as if he purchased it for market value. But it’s not illegal.

thaumasiotes 6y ago
> You’re also allowed to sell your kid your car for $1. It’ll probably be counted as a gift of market value - $1. Your kid will probably be required to pay taxes on it as if he purchased it for market value. But it’s not illegal. Sure. But when I say "this is already illegal", I'm implicitly including the kid not paying the taxes after this happens.
- sokoloff 6y ago
  They don’t have to pay income taxes on it in the US; it’s a gift. They may have to pay excise or property tax on it at the fair market value, but that’s about registering the car for road use, not about gifted property being taxable to the recipient as you claimed.
  - starfallg 6y ago
    Gifts may be taxed in the UK if they were made up to 7 years before the death of a person. The tax would then be deduced from the estate.
- cgriswald 6y ago
  Not pay taxes is always illegal, but as the sibling poster said, taxes aren't required for the gift. The state will still probably require the recipient to pay taxes to transfer the title as if you paid full market value. I say probably because it isn't always market value that's required and there is some discretion involved. The gift exemption is one way in which the wealthy already avoid existing estate taxes.
sokoloff 6y ago
Note that a married couple can give their married children 4x the individual exemption annually. (A gives C and D $15K each. B gives C and D $15K each.) Nothing about this requires C and D to be married, of course, other than A and B’s willingness may be higher to give to a spouse than a boyfriend or girlfriend.
- lotsofpulp 6y ago
  That’s just the annual amount that triggers the requirement to fill out a tax form. $60k is nowhere near where anyone would be taxed anything: https://smartasset.com/retirement/lifetime-gift-tax-exemption https://smartasset.com/retirement/lifetime-gift-tax-exemptio...
- pkaye 6y ago
  Or you can give them up to the estate tax lifetime exemption limit which is currently $22.36 million. Most people have a net worth well below this so there is no tax consequences.
  - cgriswald 6y ago
    This thread is about efforts that might be taken to avoid a hypothetical 100% no-exemption estate tax.

thaumasiotes 6y ago

> You’re also allowed to sell your kid your car for $1. It’ll probably be counted as a gift of market value - $1. Your kid will probably be required to pay taxes on it as if he purchased it for market value. But it’s not illegal. Sure. But when I say "this is already illegal", I'm implicitly including the kid not paying the taxes after this happens.

sokoloff 6y ago
They don’t have to pay income taxes on it in the US; it’s a gift. They may have to pay excise or property tax on it at the fair market value, but that’s about registering the car for road use, not about gifted property being taxable to the recipient as you claimed.
- starfallg 6y ago
  Gifts may be taxed in the UK if they were made up to 7 years before the death of a person. The tax would then be deduced from the estate.
cgriswald 6y ago
Not pay taxes is always illegal, but as the sibling poster said, taxes aren't required for the gift. The state will still probably require the recipient to pay taxes to transfer the title as if you paid full market value. I say probably because it isn't always market value that's required and there is some discretion involved. The gift exemption is one way in which the wealthy already avoid existing estate taxes.

sokoloff 6y ago

Note that a married couple can give their married children 4x the individual exemption annually. (A gives C and D $15K each. B gives C and D $15K each.) Nothing about this requires C and D to be married, of course, other than A and B’s willingness may be higher to give to a spouse than a boyfriend or girlfriend.

lotsofpulp 6y ago
That’s just the annual amount that triggers the requirement to fill out a tax form. $60k is nowhere near where anyone would be taxed anything: https://smartasset.com/retirement/lifetime-gift-tax-exemption https://smartasset.com/retirement/lifetime-gift-tax-exemptio...
pkaye 6y ago
Or you can give them up to the estate tax lifetime exemption limit which is currently $22.36 million. Most people have a net worth well below this so there is no tax consequences.
- cgriswald 6y ago
  This thread is about efforts that might be taken to avoid a hypothetical 100% no-exemption estate tax.