Q:

We want to give our grandkids some money.  Is it true that we can’t give them any more than $10,000 without triggering tax problems for them?

A:

The current limit for gifts without the need to file any gift tax returns is $12,000 per donor (giver) per donee (recipient) per calendar year.

I have this explained on my website. 

I hope this helps.

Kerry

Q:

Subject: Capital Gains Taxes Aren’t for the ‘Kiddies’

Let me see if I understand this in a real world application:

My 80-yr old mother, living on welfare, needs to pay for something (home repair, what have you) but doesn’t have the money (say $5,000).

I could sell some stocks and give her the money, but we’d both be better off if instead of giving her the money I gave her the stocks that she could then sell.

Sound right?

A:

Decisions like this would obviously be on a case by case basis.  However, if you have highly appreciated assets, such as stocks, that would trigger a large capital gain tax, shifting that tax to someone in a lower tax bracket could result in some tax savings. 

This obviously needs to be balanced out with the hassle and cost of transferring the title to the asset, as well as the possible cost and hassle of having to prepare Gift Tax returns if the total current fair market value of gifts to any one person during a calendar year exceeds $12,000.

Kerry

Follow-Up:

Oh.  I forgot to mention it was merely a hypothetical.  I wasn’t seeking actual advice.

I knew something was off from the article.  Apparently it was that the writer never mentioned the cost of transferring title to the assets.

Q:

Subject: Re: Help!

 

Is there a way to find out what the annual tax free allowance for gift tax was back in 1957?
Thank you!!!!!!

A:

It was $3,000 during the years 1943-1981.

I found this via a Google search that led me to this post from Paul Caron.

If you download the report he cites, you will see a very comprehensive history of the Gift Tax.

Kerry Kerstetter

Follow-Up:

Thank you!!!!!!!!!   Thank you!!!!!!!!!   Thank you!!!!!!!!!   Thank you!!!!!!!!!