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Old 07-21-2016, 09:49 PM
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Gift Tax Rules...small potatoes

Nice website. I tried searching but couldn't find a great example of my question. I have lent my mother $60k over the past year to improve her home. She has decided to sell the home and plans to repay after closing. We have documented promissory notes and receipts that I loaned her money. However,I paid for cabinets, flooring with credit cards to take advantage of points/airline miles so there wasn?t a true transfer transaction. Will the notes be satisfactory to the IRS for her repayment? She plans to repay in whole at once. Or can she just file a Form 709 as a gift since it?s over 14k annual limit? Please confirm that there will be no tax implications for either of us if she gifts the money back all at once as long as she files a Form 709.



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Old 07-22-2016, 05:37 AM
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Nice website. I tried searching but couldn't find a great example of my question. I have lent my mother $60k over the past year to improve her home. She has decided to sell the home and plans to repay after closing. We have documented promissory notes and receipts that I loaned her money.==========>loans to family members , so called gift loans, fall under the imputed interest rules UNLESS an exception applies.But unlike IRS?s requirement, no interest is imputed ona gift loan of $100K OR LESS, if your mom?s net investment income (taxable interest, dividends or capital gains or etc)for the year doe not exceeds $10k.However, irs treats your mom as having paid yu this amt as interest and you need to report the interest as your interest income on your return.

However,I paid for cabinets, flooring with credit cards to take advantage of points/airline miles so there wasn?t a true transfer transaction. Will the notes be satisfactory to the IRS for her repayment?========>>
the notes?d be satisfactory to the IRS for the loan lent to your mother;however, for her repayment for cabinets, flooring or etc, she needs to keep her cancelled checks and you need to keep a copy of your bank statement and receipts of the payments that show your pmts for the expenses and her repayment for the expenses to you; I mean her repayment is not a gift; A gift means: Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.So in this situation,


She plans to repay in whole at once. Or can she just file a Form 709 as a gift since it?s over 14k annual limit? =========>she never gives you a gift.As she is a payee/donee, she never files form 709; basically, form 709 is filed by a donor that made to another person within the same calendar year exceeds $14k.

If you gave gifts to someone in 2015 totalling more than $14k (other than to your spouse, then you must fiel form 709 with the US treasury.

Please confirm that there will be no tax implications for either of us if she gifts the money back all at once as long as she files a Form 709.
====================>>>>>>>>>> as said only a donor files form 709 ; aslongas you give any individual a gift valued over $14K in 2016, you must file a Form 709 to declare that gift .You cannot file a joint gift tax return. If you and your spouse each made gifts valued over $14K, you both must file a Form 709.



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