Today TaxMama hears from Robert in Texas who has a generous grandfather. “My 99 year old grandfather who lives in California, sold his residence for $250,000. He wants to gift $100,000 to each of his two daughters and keep $50,000 for himself. Can he gift this amount without triggering tax problems?”
Dear Robert,
What a terrific grandfather!
If your grandfather’s residence just sold for $250,000, I suspect his total estate is well under $1,000,000. Is that true?
If that’s the case, he can arrange the gifts in a straightforward manner. Just give the full $100,000 to each daughter.
All he has to do is file a gift tax return, Form 709, to report the gifts. There will be no tax to pay. He will simply reduce his unified credit. https://www.irs.gov/pub/irs-pdf/f709.pdf
Filing the Form 709 will do three things:
1) It will put him on record as having made the gifts.
2) It will reduce his million dollar lifetime gift limit by $200,000.
3) It will reduce his $2 million non-taxable estate assets by $200,000. (This amount rises until 2009, goes away in 2010, and reverts back to $1 million in 2011, unless the politicians sort this out.)
Perhaps you can help him prepare the Form 709? (Note: There is no filing requirement for California. California does not have a gift tax. https://www.taxes.ca.gov/specialind.html )
And remember, you’ll find answers to lots of questions about gift taxes and other tax information, free. Where? At TaxMama.com
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- IRS Form 709 :: Gift & Generation Skipping Transfer Tax
- California Franchise Tax Board :: California does not have a gift tax – just a death tax
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