Today TaxMama hears from Barb in the TaxQuips Forum with a simple question. “The farmer is selling his farm, and everything on it, to his son for $1. The basis of the farm and the machinery is approx $100,000 and FMV approx $510,000. How do I file their Form 4797?
That’s not a sale. It’s a gift.
If this is what they want to do. Fine.
File a gift tax return for everything over $13,000.
Or if Mom is still with dad, over $26,000.
Or if son is married, Mom and Dad can give the gift to son and wife = $52,000.
With a $5 million lifetime gift tax exclusion for each – Mom and Dad, there’s lots of room to do some gifting.
Nothing they do, short of a legitimate FMV sale will change the basis anyway.
And remember, you can find answers to all kinds of questions about selling to related parties and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
Please post all Comments and Replies in the new TaxQuips Forum .