Money from parents for work?


M

mkappel17

Hey all, looking to save some money on taxes:

My parents and I recently bought a property, fixed it up and
sold it for profit. The time frame of holding was short
term. Being this was our first property we did not set up a
corp first, so we are aware of the taxes we will have to
pay. There was a verbal agreement entered that the 3 of us
would split the profits evenly. For simple terms, lets say
we sold the house for 25k more then we bought it for with
10k in costs....leaving 15k profit.

What i am wondering is the best way for us to move this
money between us? Can my parents gift it to me and neither
of us pay taxes? Any and all thoughts are much appreciated.

Thank you
Mike
 
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P

Phil Marti

Hey all, looking to save some money on taxes:

My parents and I recently bought a property, fixed it up and
sold it for profit. The time frame of holding was short
term. Being this was our first property we did not set up a
corp first, so we are aware of the taxes we will have to
pay. There was a verbal agreement entered that the 3 of us
would split the profits evenly. For simple terms, lets say
we sold the house for 25k more then we bought it for with
10k in costs....leaving 15k profit.

What i am wondering is the best way for us to move this
money between us?
Cash, check or money order.
Can my parents gift it to me and neither
of us pay taxes?
No.
 
Last edited by a moderator:
R

rick++

You have what is called a "defacto partnership".
Most state legal codes have two treatments-
(1) gains split evenly among partners or
(2) gains split pro-rated per investor contribution
(if you can document such). See your state law for details.

A written contract is always recommended for these kind of
arrangments to cover something that goes wrong.
 
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H

Harlan Lunsford

Hey all, looking to save some money on taxes:

My parents and I recently bought a property, fixed it up and
sold it for profit. The time frame of holding was short
term. Being this was our first property we did not set up a
corp first, so we are aware of the taxes we will have to
pay. There was a verbal agreement entered that the 3 of us
would split the profits evenly. For simple terms, lets say
we sold the house for 25k more then we bought it for with
10k in costs....leaving 15k profit.

What i am wondering is the best way for us to move this
money between us? Can my parents gift it to me and neither
of us pay taxes? Any and all thoughts are much appreciated.
Do you mean "can your parents GIVE it to you?"
(Give is the verb and gift is a noun.)

Anyway, merely giving money does not negate the tax
consequences. You have the gist of it however, with 15k
profit, each of you pay taxes on 5k.

ChEAr$,
Harlan Lunsford, EA n LA
 
Last edited by a moderator:

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