Archive for Gift Tax

Compliance 2014 – Capital Acquisitions Tax – Ireland

The 2010 Finance Act introduced a fixed pay and file date for all gifts and inheritances with a “valuation date” after 14th June 2010. As a result, the Capital Acquisitions Tax year runs from 1st September to 31st August in the following year.

C.A.T. arising on gifts/inheritances, where the “valuation date” falls within the twelve month period ending on 31st August in a particular tax year, must be paid and filed with Revenue by the 31st October of that year.

What do we mean by “Valuation Date”?

The “valuation date” is the date on which the property making up the gift or inheritance is valued. The “valuation date” for a gift is the date the individual receives the gift but Read More

Written by | Posted in Estate Planning Tax • Gift Tax

DOMA Tax Issues – Still Outstanding

Someone recently asked me what federal tax issues are still outstanding regarding DOMA and the effect of the June 2013 Windsor decision. There are still a few income tax issues that come to mind (there are also estate and gift and state tax issues as well), that were not covered in the initial guidance (Rev. Rul. 2013-17). Here is my list. Do you have any input or additional ones to add?

Amended Returns

Will the IRS issue guidance to assist in the filing of amended returns? The current version of Form 1040X is not conducive to showing how two prior separate returns will now be treated as one MFJ return. Read More

Written by | Posted in Gift Tax • Income Tax • State And Local Tax (SALT)

Gifts From Foreign Corporations Included As Gross Income

When a U.S. person receives certain gifts or bequests from foreign corporations, those amounts may be considered as part of the U.S. person’s gross income under US International Tax regulations. The Internal Revenue Code’s regulations specifically state that when a “purported gift or bequest” is received “directly or indirectly,” the amount is included in the U.S. person’s gross income “as if it were a distribution from the foreign corporation” (1). As a result of this characterization, the purported gift or bequest has two possible treatments for tax purposes: as a dividend to the extent of the corporation’s earnings and profits, and as capital gain to the extent of the corporation’s excess over earnings and profit. Read More

Written by | Posted in Gift Tax • International

How To Treat Gifts And Bequests From Foreign (Non-US) Persons

If you are a US citizen or resident and you receive gifts or bequests (generally, an inheritance or gift of property by a Will) of money or other property from a foreign (non-US) person or entity, you may need to report these gifts on Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. Form 3520 is an information return, not a tax return. Many people receiving gifts or bequests get very confused. They mistakenly believe that they have to pay tax when they receive a gift or bequest. This is not the case – bona fide gifts or bequests are not subject to income tax in the hands of the recipient. This remains the case regardless of whether the person giving the gift is a US person or a foreign person. It remains the case regardless of the amount of the gift or bequest. Read More

Written by | Posted in Expatriate • Gift Tax • Individual • International

IRS Reporting Requirements For Gifts From A Foreign Person

Certain events, such as when a U.S. taxpayer receives a gift from a foreign person, trigger an international tax filing requirement. This event triggers the requirement to file form 3520. In general, the Form 3520 is merely an informational return, as foreign gifts typically do not result in tax consequences for the taxpayer. However, there are some significant penalties for failing to file a Form 3520 in connection with a foreign gift (1).

What is a Foreign Gift?

A foreign gift is money or other property received by a U.S. taxpayer from a foreign person. To be considered a foreign gift, the recipient must elect to treat the property or money as a gift or bequest, and exclude the amount from gross income. Note, however, that amounts paid for qualified tuition or medical payments made on behalf of a U.S. person are not Read More

Written by | Posted in Gift Tax • International

Foreign Trusts and Installment Sales

Introduction

A United States Settlor of an irrevocable Foreign Trust having a United States beneficiary is deemed to be the owner of the Foreign Trust. Subject to statutory exceptions, the Settlor is the taxable party regardless of whether the Settlor has released all dominion and control of the trust assets by an irrevocable transfer and the right to alter, amend, or modify the trust document. This is the income tax treatment of a United States Settlor by Section 679 of the Code. (1) Because the Settlor is treated as the owner of the trust assets, the transfer of appreciated assets to a Foreign Trust does not occasion a taxable event as contemplated by Section 684 of the Code. Read More

Written by | Posted in Estate Planning Tax • Gift Tax • Income Tax • Tax Provision/Tax Reporting

Senate Finance Committee Blank Slate Project 2013 – Senator Rockefeller’s Suggestions

Evaluation of Senator Suggestions for the Blank Slate Project

As noted in my 9/9/13 post, I’m going to summarize and analyze proposals senators offered to the Senate Finance Committee, and that the senator made public. Despite falling behind on my project, as tax reform likely heats up in 2014, I’m back at it as I’d like to look at and share what might be a broader array of proposals and issues. In no particular order, the second set of suggestions I’m commenting on are from Senator Rockefeller (D-WV) (7/26/13 letter). Senator Rockefeller is a member of the Senate Finance Committee.

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Written by | Posted in Capital Gains • Federal • Gift Tax • Income Tax • OECD

Israel/South Africa Expatriates Face Costly New Tax Rules

In terms of the Right of Aliyah doctrine (the right of every Jew to immigrate to Israel) every Jew going to or intending to go to Israel will be granted an Oleh’s visa. Oleh, for my colleagues not dealing with Israeli law (plural: olim) means a Jew immigrating into Israel. The Oleh Visa is granted by mere expression of the interest to “relocate” to Israel as a qualifying Jew (albeit born outside Israel after 1950).

A person shall not be registered as a Jew by ethnic affiliation or religion and will be denied Oleh Visa, despite being a Jew as defend, inter alia because of political status / activity (i.e. is engaged in an activity directed against the Jewish people or which is likely to endanger public health or the security of the state of Israel) or secondly, where a notification (issued under the Law of Return 5710-1950 as amended by Law of Return Read More

Written by | Posted in Africa • Europe, Middle East • Expatriate • Gift Tax • Individual • International • OECD • Specialty Tax Incentives • Tax Controversy • Tax Fraud/Evasion/Crimes • Tax Policy • Tax Provision/Tax Reporting

Don’t Gamble With Gift Tax Returns

Beginning in 2011, the Internal Revenue Service started cracking down on taxpayers who did not file gift tax returns after making gifts that required reporting. Working with state or county agencies, the IRS started using real estate property records to spot land transfers between family members for no or little consideration, according to an October 2011 Forbes magazine article. Taxpayers who are caught not filing a gift tax return and owe taxes can count on paying the failure-to-file penalty along with interest charges.

a. Who Must File

You do not have to file a gift tax return as long as the amount you give to one person does not exceed $ 14,000 (for the 2013 calendar year). If you are married, you and your spouse Read More

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The Gift Tax In A Nutshell

a. How the Federal Gift and Estate Tax Work Together

The federal gift tax is part of what’s called the “unified” federal gift and estate tax. Gift tax applies to lifetime gifts; estate tax applies to assets left at death. The idea is that whether you give assets away while you’re alive, or leave them at your death, they’re taxed the same way, at the same rate. After all, if there were no gift tax, then anyone could completely avoid the estate tax by giving everything away just before death.

Very few Americans need to worry about federal estate tax or the federal gift tax. Why? Because under current law, each of us has a lifetime gift and estate tax exemption of $ 5.25 million, which means that you can leave or give away up to $ 5.25 million without owing any Read More

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Last Call for Tax Deductions

There is about a week left for 2013 which means this is the last call for most tax deductions. Sure, there a few things you can still do in April when you are filing your return but the vast majority of tax deductions must be taken care of before the end of the year. It’s the holiday season so tax deductions are not likely to be on top of your to-do list, but maybe they should be.

Charitable contributions need to be made before year-end. That includes donations of appreciated stock which need to be transferred into the charity’s account before January. Sometimes the paperwork for transferring securities can take a day or two, so don’t wait until 4:00PM on New Year’s Eve to start the process. Read More

Written by | Posted in Gift Tax • Individual • Tax Provision/Tax Reporting

New Jersey Estate & Inheritance Tax: Reducing the Size of the Estate Through Gifting

New Jersey is one of only a few states that impose both an inheritance tax and a state estate tax. The inheritance tax applies when someone who lived in New Jersey, or owned property there, leaves property to someone who is not a close relative. The tax rate depends on how closely the inheritors and deceased person were related.

(1) How are inheritors classified?

The transfer inheritance tax is imposed, at graduated rates, on property having a total value of $00 or more that passes from a decedent to a beneficiary. New Jersey classifies inheritors into different groups, based on their family relationship to the deceased person. Read More

Written by | Posted in Estate Planning Tax • Gift Tax • Individual
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