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  1. #1
    Weaboo of the House of Weave
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    Taxes on gifts (or, ATTN: BG finance people)

    So the background of what I'm trying to find out

    My grandmother, whom lives with me, had my late grandfather's pension bought out by JC Penney for a pretty hefty sum of money. We want to buy a car for my cousin who has been without one for a little while.

    What we really wanted to do was just give her the money and let her buy the car herself so the vehicle would be in her name, but then I remembered, I think if we give her a substantial sum of cash, won't it be taxed?

    That said, we do want the car to end up in her name. So, that said, what would the best route to be to get to that destination?

    The car is going to be paid for in cash, straight up.


    We're in TN for local tax laws. I'm also curious as to how much she is going to be taxed on income because of this. She is by no means wealthy at all; this is just a buyout of a very long, multiple-decade pension plan that was until now half of her living income (social security)

    Thanks for any help.

  2. #2
    I Am, Who I Am.
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    You're allowed once a year (for 2015) to give a 14k gift without penalties.
    This also applies to gifting a vehicle title. If the car is worth 20k, you would have to pay tax on the 6k difference.

    The 14k limit is per gifter > giftee, your gma could gift 14k to you, and then you gift that 14k to your cousin, so she would have 28k. You could also wait closer to the end of the year and gift then, and once again at the first of the year.

    Another simple solution I would think is to just have your cousin and gma go to a dealer and your gma could just front the cash right there on the spot as a purchase, but the car would be owned by your cousin.

    It's all good faith stuff anyway, so you may be able to fly under the radar if it's all cash.

  3. #3
    Banned.

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    You can also buy the car, then sell the car to your cousin for a dollar.

  4. #4

    Sweaty Dick Punching Enthusiast

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    The reason the gift tax is a thing is because it can be used to reduce the donors taxable income... aka your g'ma. If g'ma already paid the tax on the distribution, you're done. Buy the car and roll. It is when you're trying to reduce g'mas taxable estate when the gift tax/Form 709 is applicable.

    Gift tax is paid by the donor, not the donee.

  5. #5
    The Shitlord
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    Quote Originally Posted by VeganCrossfitWOWRaidKILLA View Post
    You can also buy the car, then sell the car to your cousin for a dollar.
    No. Sales leave records, and this is just going to attract attention (because literally everyone thinks of that when trying to get around the gift tax). If you're going to have her buy it from you, you need to make it a serious sale, even if you give a hefty discount.

  6. #6
    The Anti Miz
    The Anti Miz of the House of Weave

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    Follow Seph's advice. 14k this year then any additional money in January

  7. #7
    Corwens a slot
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    Depending on the state.... taxes can be different. For instance, here in Texas parents and grand parents can gift their children or grand children vehicles for $10.
    http://comptroller.texas.gov/taxinfo...rms/14-317.pdf

    This is actually one of the few laws I actually like here... along with the whole no state tax. If TN doesn't have a law like this Seph is probably right.

  8. #8
    Weaboo of the House of Weave
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    The 14k sounds like the best idea to me but would it not work to have my cousin and my grandma both at the dealer, have my cousin sign the papers but my grandma provide something like a cashier's check?

  9. #9
    Weaboo of the House of Weave
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    Also this:

    http://www.ehow.com/info_8767900_tra...tennessee.html


    If I'm reading this right my grandmother can buy the car straight up with no issues, then use this system to gift it to my cousin. She would not owe taxes. Correct?

    edit: it seems like another very simple option is to just have both my grandmother and my cousin on the car's title?

  10. #10

    Sweaty Dick Punching Enthusiast

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    Federal would be completely different and you're over thinking it. Grandma was already taxed on the money when she got it and she just wants to buy a car for your cousin without reducing her own taxable income? Do it. We don't give a shit. People buy things for family all the time. The gift tax only comes into play when you try to say "hey I bought this thing for Mr X. It was a gift so the price of the thing I bought should reduce my taxable income, here is Form 709."

    I say we because I work for the IRS.

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