Evading the gift tax

[TaxNewbie]

My grandmother recently sold a property and wants to gift each of her children $120k. Since there is an annual exclusion on gifts of only $13k, my mother is pressuring me to set up a joint account with my sister, her husband, and myself to funnel $60k for the next two years where she can withdraw money. She would be the only person withdrawing this money.

This seems HIGHLY illegal to me and I want clarification that it is or isn't.

I've done some research but would like a clear-cut answer to my situation. I know that there is a $1 million dollar lifetime exclusion on gift taxes. Could my grandmother just gift my mother the full $120k without her having to pay taxes? Also, would this eat into her estate?

Thanks!

[SSandecki]

Tax evasion is a serious crime and can result in federal prison terms; she could easily just gift her mother the money to prevent any pending issues.

[jimb12345]

the irs will definitely find out. So i would pay it. they will find out.

[Bradley Kelley]

Hello guys!

I understand your problem and tax evasion is big crime and the amount$120k i think so she gave her to without payment of tax and let it be i will find out...Flowers

[Callista Gail]

The receiving party cannot pay the giver full value for the gift, but may pay an amount less than its full value. It is the giver of the gift who is required to pay the gift tax.

[nickolasleigh]

kind of interesting and i was not aware that there are such formalities for a simple gift too.I think i had to learn about the law a lot.Thank you

[nvehcols]

There are many more complication involved that you think it to be in this cases as the joint account will in the future lead to further problems. I'd suggest you to consult a tax consultant and this will help you get the better idea about what has to be done.

[sc doc]

I have a different gift tax evasion question. Suppose my daughter produces a work of art (painting, recording, etc) and I draw up a sales contract purchase it for a very large amount that would reduce my estate, in addition to giving her the maximum allowable annual gift, is this a legal way to get around the gift tax limitations? Is'nt the fair market value of a one-of-a kind piece of art what someone is willing to pay for it?

[pcmeiners]

It is not evasion, it is avoidance, if done legally as per the Federal Gift tax law....

"I draw up a sales contract purchase it for a very large amount that would reduce my estate"
Sounds nice but it will not work, you need an appraiser to value the "art", you being related will not allow you to give it a value; basically an appraiser must live up to Federal guidelines.

Aside from the annual exclusion, you could use some or all of your Federal "life time exclusion", which would be deducted from any estate asset exclusion .

http://www.fairmark.com/begin/gifts.htm