AboutJohn Stancil, CPA Expertise I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Association of Tax Professionals, and the Institute of Management Accountants.
Visit my website at www.johnstancilcpa.com.
Also visit my blog, www.thetaxdocspot.com.
Experience I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper. I have prepared taxes for over 30 years.
Education/Credentials DBA University of Memphis
MBA University of Georgia
BS in Accounting Mars Hill College
To close my recent escrow, my aunts company which is incorporated made a check to me in the amount of $29,000. From my understanding, a business can not give a gift therefore I have no $13,000 tax free gift to help me out. If I draft up a demand loan, will the $100,000 rule still apply to me in this situation, leaving me and my aunts company free from any tax liability? My net investment income will be less than $1000 for 2009.
Thanks!
Chris
Answer Chris,
Thanks for your question.
Just to clear up a point, the $13,000 is the exclusion the donor gets annually to avoid gift tax - this is not an income tax issue.
The corporation can loan you the money, or your aunt can make a withdrawal, reducing her capital account and give you the money.
The issue here is not really a tax issue but one of keeping personal and corporate affairs separate. By you aunt having the corporation give you the money, that line is crossed and could result in losing the corporate protection.
There is more than one rule dealing with $100,000 but if it is a loan, interest must be charged and the terms of the loan must be adhered to.
