B
Brian Gordon
We sold our son a house at less than market value (about
$150K less). Is that amount a taxable event for either of
us?
$150K less). Is that amount a taxable event for either of
us?
You treat the sale on your 1040 as you would a sale to aBrian Gordon said:We sold our son a house at less than market value (about
$150K less). Is that amount a taxable event for either of
us?
It sounds like you made a gift in the amount of theBrian Gordon said:We sold our son a house at less than market value (about
$150K less). Is that amount a taxable event for either of
us?
You'll need to file a gift tax return for the amount of theBrian Gordon said:We sold our son a house at less than market value (about
$150K less). Is that amount a taxable event for either of
us?
Definitely not for him.We sold our son a house at less than market value (about
$150K less). Is that amount a taxable event for either of
us?
are you inquiring about income or gift taxes? probably notBrian Gordon said:We sold our son a house at less than market value (about
$150K less). Is that amount a taxable event for either of
us?
What is that argument? It seems to me that the sale is whatRich Carreiro said:But there's a very strong argument that you should be
treated exactly the same as if you:
(a) sold the house for full fair market value, and
(b) made a $150K cash gift to your son
Yes: you have (probably) a capital gain on the house, but itBrian said:We sold our son a house at less than market value (about
$150K less). Is that amount a taxable event for either of
us?
Whenever you can have taxable income but choose not toWhat is that argument? It seems to me that the sale is what
the sale is, and the difference between FMV and the sale
price is the gift. Why would they have to consider FMV as
the sale price AND calculate the gift aspect?
Taxes don't depend on the IRS knowing underlying facts,Yes: you have (probably) a capital gain on the house, but it
depends on the actual amount. There is no gift tax because
the IRS doesn't know what the market value is, do they?
I'm not sure how this one got past the moderator, but forRick Merrill said:Yes: you have (probably) a capital gain on the house, but it
depends on the actual amount. There is no gift tax because
the IRS doesn't know what the market value is, do they?
But it's clear that if he just gives the house to his son,Whenever you can have taxable income but choose not to
(unless subject to a specific exclusion or deduction) you
will generally be required to recognize the income when you
could have had it, even if you didn't.
Because the son takes the same basis as the father, so theBut it's clear that if he just gives the house to his son,
there's no income tax due.
Interesting analysis. In that case father may not have toNow suppose the house is worth $600K, and he sold it to his
son for $450K. His basis is $300K.
Someone might claim that he gifted 1/4 of the house to his
son, and sold 3/4 for FMV. He's have a gain of $225K, and
his son would have a basis of $525K.
Sure, when you apply it to situations the code explicitlyAnd I'll completely disagree on the "could have had".
Maybe that's a convoluted way of thinking of this: There'sWhat is that argument? It seems to me that the sale is what
the sale is, and the difference between FMV and the sale
price is the gift. Why would they have to consider FMV as
the sale price AND calculate the gift aspect?
That sounds reasonable, except that the "gift" exists ONLYMaybe that's a convoluted way of thinking of this: There's
an amount actually paid, plus a gift made (and potentially
gift tax).
Twaddle. Economic reality, which can be considered in theThat sounds reasonable, except that the "gift" exists ONLY
in the minds of the participants. There is no external
evidence of said "gift". There is no check with the gift
amount. There is no receipt saying "gift" or "gratuity".
Hence there was no gift, just a good transaction.
If it's an arm-length transaction, you're right. But ifThat sounds reasonable, except that the "gift" exists ONLY
in the minds of the participants. There is no external
evidence of said "gift". There is no check with the gift
amount. There is no receipt saying "gift" or "gratuity".
Hence there was no gift, just a good transaction.
Twaddle. Economic reality, which can be considered in the
enforcement of tax law, says that if it walks and quacks
like one it is one. A sale to a family member for $150K
under FMV clearly has a gift aspect even if they call it
barking at the moon.
You can't quote an IRS publication that says "walks and quacks".Keep howling: a 10% "gift" is not going to set off alarms.
So it's ok to cheat as long as it's so small that you'reKeep howling: a 10% "gift" is not going to set off alarms.
You can't quote an IRS publication that says "walks and quacks".
I think your bark is is worse that your bite.
I can find court rulings about "form over substance".Keep howling: a 10% "gift" is not going to set off alarms.
You can't quote an IRS publication that says "walks and quacks".
I think your bark is is worse that your bite.
Want to reply to this thread or ask your own question?
You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.