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my mother gifted my sister and me 1 mill in 2002. we know ...

Sent to Tax Experts January 27 06:01 PM

my mother gifted my sister and me 1 mill in 2002. we know that the estate tax exclusion is up to 2 mill for this year, 2006. Can she gift us another 1mill this year? If so, would she have to pay gift taxes? How much wld the gift tax be?

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grand island, New York

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my first question

Customer (name blocked for privacy)
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January 27 6:17 PM (15 minutes and 59 seconds later)
         
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The lifetime gift exclusion is a part of, but separate from, the estate exclusion. Each person currently has a $1,000,000 lifetime gift tax exemption. This is per "giver" not per recipient.

She can give you $1 MM this year. It is likely that at least some part of it would be subject to gift tax. Without knowing her entire gifting history, it is impossible to say with a certainty how much the gift tax would be - the gift tax is cumulative . In other words, taxable gifts made this year will be added to taxable gifts made in previous years to determine the rate that applies to this year's taxable gifts.

jon@jonacpa.com



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January 27 6:21 PM (3 minutes and 48 seconds later)
         
she has no other taxable gifts- she wld gift the annuall exclusions yearly, but that is all. so is there a percentage for the gift tax? or does this occur when she dies?
Customer (name blocked for privacy)
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January 27 6:24 PM (2 minutes and 46 seconds later)
         
Relist: I still need help.
she has not given any other gifts that wld be taxed, only the annaul exclusion of 10, then 11 now 12k
Customer (name blocked for privacy)
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January 27 6:25 PM (1 minute and 22 seconds later)
         
you said gift tax is cumulative, so far, she has gifted 0, so what wld the tax percentage be on the extra mill?
Customer (name blocked for privacy)
Info Request
January 27 6:28 PM (2 minutes and 24 seconds later)
         

Your original post stated that she gave you $1 MM in 2002. Is that correct? or is there a different circumstance?

jon



Helping individuals and businesses nationwide reduce taxes and increase profits through sound planning and quality service

Jon Andrews -- Certified Public Accountant (CPA) -- 100% Positive Feedback on 2630 Tax Accepts
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January 27 6:31 PM (3 minutes and 40 seconds later)
         
oops, YES she did, but that was an EXCLUSION, no gift tax...she has not given anymore, only the annual exclusions...is there a rate, much like income tax brackets? thank-you
Customer (name blocked for privacy)
Answer
January 27 6:42 PM (10 minutes and 17 seconds later)
         
REPLIEDCheck Mark

Even though there was no tax, the portion in excess of the annual exclusion is "taxable" - the exclusion was applied to it to prevent actual tax from being owed. She does not get another $1MM exemption from gift tax - only from estate tax. If she gave you the $1MM in 2002, any additional gifts that exceed the annual exclusion amount will be taxable AND will have actual gift tax owed.

Based on the facts presented, a $1,000,000 gift in excess of the annual exclusion in 2006 would incur gift tax of approximately $435,000.

jon



Helping individuals and businesses nationwide reduce taxes and increase profits through sound planning and quality service

Jon Andrews -- Certified Public Accountant (CPA) -- 100% Positive Feedback on 2630 Tax Accepts
I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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January 27 6:48 PM (6 minutes and 40 seconds later)
         
Reply to Jon Andrews's Post: thank you very much-looks like we will NOT be encourageing her to give us more...do you think the 1 mill EXCLUSION will be increased in the NEAR future???
Customer (name blocked for privacy)
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January 27 6:56 PM (7 minutes and 37 seconds later)
         
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Jon Andrews -- Certified Public Accountant (CPA) -- 100% Positive Feedback on 2630 Tax Accepts
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January 27 7:01 PM (4 minutes and 46 seconds later)
         
for my sister, she has a son entering college and I KNOW she wants Mother to pay for his tuition. My husband and I do not have any children, this wld make me angry, as her children's private school has been paid for all these years, about $3ook already taken out of mom's estate for my sister's family. I don't want her to get anymore unless I am given the same amount.
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January 27 7:04 PM (3 minutes and 50 seconds later)
         
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Jon Andrews -- Certified Public Accountant (CPA) -- 100% Positive Feedback on 2630 Tax Accepts
I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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January 27 7:08 PM (3 minutes and 28 seconds later)
         
THANK YOU-appreciate your answers, I was embarrassed to admit that in front of mother's trust advisors and estate planners-wishing you a wonderful weekend-have never done anything like this over the computer before-it was great, thanks for your help.
Customer (name blocked for privacy)
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January 27 7:35 PM (27 minutes and 15 seconds later)
         
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Jon Andrews -- Certified Public Accountant (CPA) -- 100% Positive Feedback on 2630 Tax Accepts
I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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