Gifting Grandpa

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.

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. )

And remember, you’ll find answers to lots of questions about gift taxes and other tax information, free. Where? At

[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips, too. Please click on the subscribe link and join us.]

File Download (0:00 min / 0 MB)