Do I have to pay gift taxes? 7 Answers as of April 25, 2011

If parents "gifted" a house to one child (left the other completely outnever mentioned other child in will when leaving contents of house to the child they gifted house to) do they have to pay a gift tax on this gift?

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Law Office of Harry Gordon Oliver II
Law Office of Harry Gordon Oliver II | Harry Gordon Oliver II
If gift incurred at death, an estate tax may be due. If gift is given during life, a gift tax may be payable.
Answer Applies to: California
Replied: 4/25/2011
Steven J. Fromm
Steven J. Fromm | Steven J. Fromm & Associates, P.C.
Generally, gift taxes relate to gifts made while alive. Here you have a bequest from a decedent. When a person dies their estate generally pays any estate taxes at the federal level and inheritance tax at the state level; the beneficiary generally does not pay such taxes. You do not specify the year of death, but in 2011 the federal exemption is $5,000,000 and in 2010 there was generally no federal estate tax. There may be a state inheritance tax to be paid by the estate, but you do not mention the state of the decedent. In any event, the beneficiary does not pay any of these transfer taxes, they are paid from the estate.
Answer Applies to: Pennsylvania
Replied: 4/19/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
Is this a transfer at the death of the parent or a gift during life? If this is a transfer upon death, gift taxes would not apply but estate taxes may.
Answer Applies to: New Hampshire
Replied: 4/19/2011
Givner & Kaye
Givner & Kaye | Bruce Givner
You should consult with your CPA. Any transfer of property during lifetime should be reported on an IRS Form 709 (Federal Gift Tax Return). Even if the value of the property is less than the annual gift tax exclusion ($13,000 per donor), a gift tax return should be filed. Why? Because filing the return, disclosing the transfer (in a manner designed to comply with the Section 6501 regulations) causes the 3 year statute of limitations to run. Therefore, the IRS cannot - in the future - claim that the gift's value was larger. If you fail to report a gift, and the IRS later claims the value was larger, then the IRS can always assert a gift tax was due - at any time, no matter how many years in the future. If the transfer was by Will, then that is not a gift. That is a transfer that may need to be reported in an IRS Form 706 (Federal Estate Tax Return). Whether or not a 706 is needed depends upon the value of the estate. If it is this year, the estate would have to be near $5,000,000 in value. Again, you should talk to your CPA.
Answer Applies to: California
Replied: 4/19/2011
Benari Law Firm
Benari Law Firm | Arik T. Benari
This is a better question for an accountant as its a pure tax question, but it should depend on how title to the house was transferred.
Answer Applies to: Pennsylvania
Replied: 4/18/2011
    Apple Law Firm PLLC
    Apple Law Firm PLLC | David Goldman
    Gift taxes are paid by the person making the gift, not receiving it. Unfortunately if the home was given to you while your parents were alive, your cost will be $0 so when you sell it you will pay much more in taxes than if you had received it upon death.
    Answer Applies to: Florida
    Replied: 4/18/2011
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