Best STRATEGY to buy my Dad's Truck from Him?

[Srt20]

Originally Posted By: SumpChump
Originally Posted By: Srt20
In the state of WI, a parent can sell or give a vehicle to a child tax free. Immediate family is tax exempt.

Look it up.


Ok, that's awesome. So I basically "buy" it from him for a reasonable. Amount or do you think the the $5 sale still wouldn't cause any phone calls or supervisor visits?

I think the gift "check box" option is out the window since I already at this year's $14k gift amount.

Put whatever you want. You don't have to pay taxes on it whether it's $5 or $5 million.

 

[Srt20]

Btw, not sure where you are getting this $14k gift stuff from. Your parents can give you whatever they want. You don't have to pay tax on it.

 

[SumpChump]

Originally Posted By: Srt20
Originally Posted By: SumpChump
Originally Posted By: Srt20
In the state of WI, a parent can sell or give a vehicle to a child tax free. Immediate family is tax exempt.

Look it up.


Ok, that's awesome. So I basically "buy" it from him for a reasonable. Amount or do you think the the $5 sale still wouldn't cause any phone calls or supervisor visits?

I think the gift "check box" option is out the window since I already at this year's $14k gift amount.

Put whatever you want. You don't have to pay taxes on it whether it's $5 or $5 million.


Sweet. Family Sale = No Tax = No minimum "anti-suspicion" $ sale level

 

[SumpChump]

Originally Posted By: Srt20
Btw, not sure where you are getting this $14k gift stuff from. Your parents can give you whatever they want. You don't have to pay tax on it.


I was told very clearly by my tax preparer ( also he's an accountant but not acting as my retained accountant) that $14,000 a year is the MAXIMUM gifted amout allowed above that is subject to gift tax. I have this year recieves that in funds alone already. Outside of a property (object) gift.

But wait, I think my wife can technically get gifts from him totaling $14k a year also. If that is true it is awesome. Problem solved... They gift the truck to her and we register it as we wish in both our spousal names.

 

[SatinSilver]

The 14k applies to currency only not assets is my understanding.

 

[Srt20]

Originally Posted By: SumpChump
Originally Posted By: Srt20
Btw, not sure where you are getting this $14k gift stuff from. Your parents can give you whatever they want. You don't have to pay tax on it.


I was told very clearly by my tax preparer ( also he's an accountant but not acting as my retained accountant) that $14,000 a year is the MAXIMUM gifted amout allowed. I have teaches that in funds alone already. Outside of a oriberty (object) gift.


Im pretty certain your parents can give you whatever they want. And the IRS cannot tax you. Though if your parents are using your gift as a tax deduction the max limit for tax deduction may very well be $14k.

I am not an account, and I may be wrong. But I doubt it. You should really check into this better. My parents have given me over $14k in a year before.
And even if I am wrong, how is the IRS going to know anyway?? And why would you tell them?

 

[SumpChump]

Originally Posted By: Srt20
Originally Posted By: SumpChump
Originally Posted By: Srt20
Btw, not sure where you are getting this $14k gift stuff from. Your parents can give you whatever they want. You don't have to pay tax on it.


I was told very clearly by my tax preparer ( also he's an accountant but not acting as my retained accountant) that $14,000 a year is the MAXIMUM gifted amout allowed. I have teaches that in funds alone already. Outside of a oriberty (object) gift.


Im pretty certain your parents can give you whatever they want. And the IRS cannot tax you. Though if your parents are using your gift as a tax deduction the max limit for tax deduction may very well be $14k.

I am not an account, and I may be wrong. But I doubt it. You should really check into this better. My parents have given me over $14k in a year before.
And even if I am wrong, how is the IRS going to know anyway?? And why would you tell them?


Here's what I found... I a nutshell my parents combined can give me $28k per year tax free of property/cash. So I should be fine getting the truck as a gift officially.

QUOTE:
How the Annual Exclusion Works
The $14,000 annual tax exemption rule (called the "annual exclusion") is pretty straightforward. For instance, if you give $20,000 to someone, $14,000 of it is exempt from gift tax, but you must pay gift tax on the remaining $6,000.

The exclusion amount is indexed for inflation, rising in $1,000 increments as the cost of living goes up.

Couples: Double Your Exclusion

Couples can combine their annual exclusions, meaning that they can give away $28,000 worth of property tax-free, per year, per recipient. In fact, even if only one spouse makes a gift, it's considered to have been made by both spouses if they both consent. (Internal Revenue Code § 2513.)

 

[Srt20]

Originally Posted By: SumpChump
Originally Posted By: Srt20
Originally Posted By: SumpChump
Originally Posted By: Srt20
Btw, not sure where you are getting this $14k gift stuff from. Your parents can give you whatever they want. You don't have to pay tax on it.


I was told very clearly by my tax preparer ( also he's an accountant but not acting as my retained accountant) that $14,000 a year is the MAXIMUM gifted amout allowed. I have teaches that in funds alone already. Outside of a oriberty (object) gift.


Im pretty certain your parents can give you whatever they want. And the IRS cannot tax you. Though if your parents are using your gift as a tax deduction the max limit for tax deduction may very well be $14k.

I am not an account, and I may be wrong. But I doubt it. You should really check into this better. My parents have given me over $14k in a year before.
And even if I am wrong, how is the IRS going to know anyway?? And why would you tell them?


Here's what I found... I a nutshell my parents combined can give me $28k per year tax free of property/cash. So I should be fine getting the truck as a gift officially.

QUOTE:
How the Annual Exclusion Works
The $14,000 annual tax exemption rule (called the "annual exclusion") is pretty straightforward. For instance, if you give $20,000 to someone, $14,000 of it is exempt from gift tax, but you must pay gift tax on the remaining $6,000.

The exclusion amount is indexed for inflation, rising in $1,000 increments as the cost of living goes up.

Couples: Double Your Exclusion

Couples can combine their annual exclusions, meaning that they can give away $28,000 worth of property tax-free, per year, per recipient. In fact, even if only one spouse makes a gift, it's considered to have been made by both spouses if they both consent. (Internal Revenue Code § 2513.)


Well ok, there ya have it.

I still wouldn't tell the IRS anything though. I was given $30k from my mother all at one time. My brother was given the same. Neither of us paid any tax, nor did my mother.

When Warren Buffet pays the proper amount of tax per his income, I might think about doing the same. But I doubt it. lol

 

[HTSS_TR]

Originally Posted By: Mr Nice
Here in Florida, you sign the title and you write 'gift' in the box for sale price. You just pay $70 fee to transfer title into your name, zero tax paid.

Same in California, you just pay title transfer fee which is about $30-40, but you have to have smog check.

 

[eljefino]

If your dad winds up in a nursing home the state will come after all the money he gave you five years prior once his funds run out, and they run out fast.

This may be something you can plan around if you have solid legal help. The truck might be a good way to transfer wealth, actually, better than cash, but talk to a pro.

 

[surfstar]

http://blog.taxact.com/gift-tax-do-i-have-to-pay-gift-tax-when-someone-gives-me-money/
Each year, the amount a person gives other people over the annual exclusion (14k per person) accumulates until it reaches the lifetime gift tax exclusion.

Currently, a taxpayer does not pay gift tax until they have given away over $5.43 million in their lifetime (2015).

Does the gift recipient ever have to pay gift tax?
If the donor does not pay the tax, the IRS may collect it from you.

However, most donors who can afford to make gifts large enough to be subject to gift taxes can also afford to pay the tax on the gifts.



So, you won't have to pay any taxes on gifts received, unless they have exceeded their $5.43M lifetime exemption. Then, as a receiver, you might have to pony up.

 

[Nick1994]

Paying taxes on a used car purchase? Huh?

 

[Garak]

Originally Posted By: Nick1994
Paying taxes on a used car purchase? Huh?

That can happen.

 

[ZTime33]

In Illinois:

"The tax is imposed on motor vehicles purchased (or acquired by gift or transfer) from another individual or private party"

if more than $15,000, tax based on purchase price.
less than $15,000, use table based on model year.

 

[SumpChump]

Originally Posted By: eljefino
If your dad winds up in a nursing home the state will come after all the money he gave you five years prior once his funds run out, and they run out fast.

This may be something you can plan around if you have solid legal help. The truck might be a good way to transfer wealth, actually, better than cash, but talk to a pro.


SO in other words I might as well just REFUSE his $ gifts because I basically have to hold them, they are not my property and the state will demand a check for those exact amounts back? He isn't going to make it 5 years fellas. So under MediCare "look back" laws... the money is basically gone already. I want to take it all and throw it into a dumpster and burin it right now really.

 

[Srt20]

Originally Posted By: surfstar
http://blog.taxact.com/gift-tax-do-i-have-to-pay-gift-tax-when-someone-gives-me-money/
Each year, the amount a person gives other people over the annual exclusion (14k per person) accumulates until it reaches the lifetime gift tax exclusion.

Currently, a taxpayer does not pay gift tax until they have given away over $5.43 million in their lifetime (2015).

Does the gift recipient ever have to pay gift tax?
If the donor does not pay the tax, the IRS may collect it from you.

However, most donors who can afford to make gifts large enough to be subject to gift taxes can also afford to pay the tax on the gifts.



So, you won't have to pay any taxes on gifts received, unless they have exceeded their $5.43M lifetime exemption. Then, as a receiver, you might have to pony up.

Ok now this makes sense. Finally.

 

[Srt20]

Originally Posted By: SumpChump
Originally Posted By: eljefino
If your dad winds up in a nursing home the state will come after all the money he gave you five years prior once his funds run out, and they run out fast.

This may be something you can plan around if you have solid legal help. The truck might be a good way to transfer wealth, actually, better than cash, but talk to a pro.


SO in other words I might as well just REFUSE his $ gifts because I basically have to hold them, they are not my property and the state will demand a check for those exact amounts back? He isn't going to make it 5 years fellas. So under MediCare "look back" laws... the money is basically gone already. I want to take it all and throw it into a dumpster and burin it right now really.

Give it all to me. Let it be my problem. I'll let ya know how it turns out.

 

[javacontour]

I think there are some exemptions for transfer by immediate family here in IL.

Looking at the instructions for IL RUT-50, I believe it's $15 to transfer to immediate relative.

Originally Posted By: IL RUT-50 Instructions


2 Exception — Mark the appropriate box and write “$15”
on Step 6, Line 1.
2b) Transferred due to the organization, reorganization, dissolution,
or partial liquidation of business. Beneficial ownership is not
changing.
2c) Transferred or purchased from spouse, parent, brother, sister, or
child. Spouses include parties in a civil union.



Originally Posted By: ZTime33
In Illinois:

"The tax is imposed on motor vehicles purchased (or acquired by gift or transfer) from another individual or private party"

if more than $15,000, tax based on purchase price.
less than $15,000, use table based on model year.

 

[69GTX]

My Dad "sold" me one of his vehicles for $1 many years before he got sick. That was the bill of sale I presented to the DMV when I went to register it. I didn't pay any state sales tax.

When my Dad was within days of passing the estate executors legally handed out $11K gifts (the limit at that time) to dozens of immediate family members. His newest car ended up being part of the estate after he passed. I ended up getting that car but had to pay a "fair" price.

If the law allows you to legally not pay sales, gift, or other taxes....why pay it?

 

[threeputtpar]

First off, I'm sorry to hear about your father's poor health condition and his very limited time on this Earth. My prayers go out to you.

I'm a CPA and have thoroughly researched this topic as I helped my parents reduce their tax bill by creatively titleing a rental property in my name and then back in theirs. Both times it transferred, it was via gift because of the aforementioned large lifetime exclusion.

He can gift the vehicle by just writing GIFT in the sales price box and filling out the rest as you normally would. Then on his tax return he will have to fill out an additional form for Gift and Estate Tax. This will use up part of his lifetime maximum and he will owe no tax on the transaction. You would never owe any as the receipient of the gift. WI follows Federal in regards to gift taxes, so no payment is needed for the state.

When you go to title it in your name, you will have to pay for the transfer and yearly renewal but no sales tax.

Edit: As someone else stated, this gift is completely separate from the annual maximum of $14k per spouse per year that he can give you and your wife in cash. No additional forms needed for the $14k he gave you.