@Francis,
Francis wrote:
in a moment of wishful abandon, David wrote:
Gifts are not taxable to the recipient.
Francis wrote:Such comments just leave me taken aback..
Frow which state fiscal law is this coming?
Federal income tax; Internal Revenue Code.
You didn't read it quite well did you, David?
Quote:Under Internal Revenue Code section 102(b)(1), income subsequently derived from any property received as a gift is not excludable from the income taxed to the recipient.[4] In addition, under Internal Revenue Code section 102(b)(2), a donor may not circumvent this requirement by gifting only the income and not the property itself to the recipient. [5] Thus, a gift of income is always income to the recipient. Permitting such an exclusion would allow the donor and the recipient to avoid paying taxes on the income received, a loophole Congress has chosen to eliminate.
Emphasis added by me.
Let me begin my response by noting that
I have never practiced tax law, which is considered a specialty,
nor have I had any reason to keep up to date on this point (i.e., taxability of gifts).
However,
I suspect that your quotation fails to include a broader context. I am not 100% certain
that I am correct about this. Fortunately, it does not matter to me, since I do not intend to give anything away.
I have a
vague hunch that the statute that u quoted contemplates
a pre-existing commercial relationship between the parties,
rather than their being strangers, or casual friends unrelated by any
profit making enterprize.
I don 't know, but I suspect, that a gift remains (above a designated minimum)
taxable to the donor, not to the recipient.
However, if the gift is made within the context of a broader relationship of payment for services rendered,
then it may well be considered by the IRS to be earned income,
as distinct from a pure gift, which is not earned income,
and hence is not taxable.
That is my general sense of the situation.
In other words, if an employer, for example, presents his employee
with a bonus, the IRS will deem that to be ordinary income,
the same as a salary, but if u give cash to a stranger with whom
u have no commercial relationship, he has no tax liability for that
and any taxes due thereon are assessed against the donor, not the donee.
It might well be the case that in the event that the donor
fails to pay taxes owed on the gift, that the donee might
then become obligated to pay that tax.
NOTHING SHOUD
BE DECIDED WITHOUT CAREFUL, CURRENT RESEARCH OF
THE APPLICABLE STATUTE AND CASE LAW.
My comments are only my general offhand opinion of many years' standing
and I have
not checked to ascertain whether changes have been
effected to that principle or not. No one shoud take what I said
to constitute legal advice.
.......dear goddess.
