Gift tax - Spidell

Gift tax

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Message Board Gift tax

  • This topic has 3 replies, 4 voices, and was last updated 1 year ago by William Dewberry.
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    • #274515


      I have the following situation. An individual (parent) gifts the taxpayer (Son) a large interest in a property. (The child now shows a 25% interest in an LLC.  which owns the building) The individual  never gives the taxpayer any distributions and the taxpayer receives a k-1. (Which shows the income). The individual pays the increase in tax for the taxpayer – which resulted from the k-1. income.
      Now Due to a family dispute, the individual does not want to pay the Increase in taxes on the taxpayers return (which is due to the k-1. ) Taxpayer is upset and wants to “return” the gift. Is the taxpayer able to “return the gift”?

    • #274516
      Lynn Freer

      I suppose he could gift it back, which would result in another gift tax. I think you might want to have him talk with a tax attorney.

    • #274517
      David Ellis

      I would say your client just learned the hard way the perils of owning a minority interest in a passthrough entity. I do not think he could gift the property back….unless the other party agreed to accept the gift….and they would have to formally transfer the interest in the LLC.  A better option might be to sell his interest in the LLC to another family member….or even a third party……but who wants an investment that throws off taxable income but no cash. I believe this is what they used to call a White Elephant.

    • #274528
      William Dewberry

      Another option is for him to abandon his partnership interet, we do this sometimes to generate an ordinary loss; the partner notifies the managing memeber they are abandoning thier partnership interest as of X date.

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