Is That Gift Taxable?

Gift tax background removedThat nice check you sent to your niece when she graduated from college, and that plot of land you gave to your brother-in-law so he could build a vacation home – both could result in you having to pay a gift tax. But the donation you made to your favorite charity should not result in your getting a tax bill.

While some gifts are not subject to the gift tax, there are many more gifts that will end up costing you more than their value in the form of a gift tax. Here is a brief overview to help you determine which gifts may be subject to the gift tax, and which can be given freely. Continue reading

The Supreme Court DOMA Ruling’s Tax Implications for Same-Sex Couples

The July 3rd issue of Gray, Gray & Gray’s The Advisor newsletter featured an article outlining the many possible advantages that same-sex married couples will now have as a result of the Supreme Court’s recent Defense of Marriage Act (DOMA) decision. The potential advantages of this ruling, which indicated that the federal law that prohibited same-sex couples from being treated as married is unconstitutional, are extremely important from a tax point of view.

Over the last few years we have recommended that married same-sex couples consider filing a claim for protective refund, if it would be beneficial. Now that the Supreme Court has ruled, it is important for same-sex couples to determine if it is beneficial to file amended returns for open years. In addition, same-sex couples should review any gift tax returns that have been filed.

If you have questions about tax implications of the DOMA decision and whether amending returns might be beneficial, please contact Gray, Gray & Gray’s Tax Department at (781) 407-0300.

Update on “Formula Gifting”

formula giftingFor taxpayers who make gifts this year, we have been strongly recommending they consider using the “formula gifting” mechanism. The formula gifting mechanism can be used to avoid any increase in the  amount of gift tax in the event the value of the gift is challenged by the Internal Revenue Service.

This gifting process is based on the Tax Court’s Wandry v. Commissioner, T.C. Memo. 2012-88 (2012) case. Recently the IRS withdrew their appeal of the Wandry case in the 10th Circuit Court of Appeals and the case was dismissed. Continue reading

Making a Gift to the USA

If you make a voluntary contribution to the Bureau of the Public Debt, it will treated as a tax deductible charitable donation. You can make this donation either by checking a box on your tax return, to have all or part of your refund used a donation, or writing a check to:

Bureau of the Public Debt
Department G
P.O. Box 2188
Parkersburg, WV 26106-2188

If you have any questions regarding making a gift to reduce the deficit, please contact the Gray, Gray & Gray Tax Department at (781) 407-0300.


Formula Gifting – A New Concept

Many people are considering making substantial gifts to their children or grandchildren this year to take advantage of the current, historically-high lifetime gift tax exclusion.  There is a new approach to consider: “Formula Gifting”.  Continue reading

A Major Win for Gift Tax Valuation

A recent tax court decision, Wandry v. Commissioner, T.C. Memo 2012-88, found that a gift can be made indicating an amount of assets rather than what the assets are.  The taxpayers made a gift to their children and grandchildren in an LLC based on a specific dollar amount rather than a percentage of the LLC.  Although this may not sound like much of a difference, there is an important distinction between the two.  Simplistically, what it accomplished is that if the IRS was able to challenge and change the valuation of the percentage of the LLC gifted, the percentage would change and the taxpayer would not incur any additional gift tax exposure.  This means that regardless of the eventual findings, the IRS could not collect additional taxes. Continue reading

Better to Give It Away Before Uncle Sam Takes It Away

By Michael D. Koppel, CPA
Gray, Gray & Gray, LLP

 As a tax accountant my job is to make sure my clients meet their legal obligations to the Internal Revenue Service, while helping them to retain as much of their assets as possible. It is a delicate balance that may soon be tipped further in favor of the tax collector. This is especially true for successful business owners who have managed to accumulate significant savings. Continue reading

Death, Taxes and a Pending Deadline

“In this world nothing can be said to be certain, except death and taxes.”
Benjamin Franklin
In the years since Mr. Franklin penned this notable adage, the question has ironically become, “How can we best avoid the taxes caused by death?”
Gift and estate taxes have been part of the American tax scene for many years. Currently, with proper planning, a couple can pass approximately $10,000,000 of assets to their heirs without incurring additional taxes. This amount can be significantly higher depending on the type of assets and discounts that may be applied. It is also important to remember that, for a number of years prior to 2011, the gift exemption was significantly less than the estate tax exemption. Continue reading