Tax Law (Questions About Taxes)/Gift tax return

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Question
Good afternoon Mr. Stancil  ..I've been reading the IRS instruction on how to complete Form 709 and am still clueless on how to complete the columns in Schedule A, Part 1.  I am in need of your assistance to help me prepare Form 709 for my mother and older brother.

They both are joint tenants (equal shares) of a home that all three of us currently live in.  Last year, they added me (daughter/sister) to the deed of the home such that each of us now have equal shares (1/3 each - 3-way joint tenancy).  Here's my situation (please note that $ amount is hypothetical):

Adjusted basis of home:  $80,000
FMV at time of gift:  $ 300,000
My mother and brother are each gifting me 1/3 of their share.


My questions pertain to Schedule A, Part 1:

1) Based on the example above, am I correct in my assumption that the total value of gift that my mother and brother gifting me is only $50,000 each ( 1/3 of $150,000 of their share in the FMV)?

2) Donor's adjusted basis of gift - Do I split the adjusted basis and show only my mother's 50% portion ($40k) on her 709 and likewise for my brother on his 709?

3) Value at date of gift - do I show the value of the gift ($50,000) or the donor's share of the FMV of the gift ($150k each)?

4) where and how do I show the $ 50,000 gift value under Part 1 so that I can transfer that same amount on Line 1 of Part 4 in the Taxable Gift reconciliation?   

5) does the "gift splitting" provision apply to my situation?

Thank you very much for your help and hoping to hear from you soon.

Answer
Sophie,

Thanks for your question.

1. That is correct. Each gave you $50,000

2. No. each of them has a total basis of $40,000. You got 1/3 of that.

3. The value of what you got. $50,000 from each of them.

4. Page 2, Schedule A, Part 1.

5. Gift splitting is not applicable here. This allows married couples to treat a gift as coming equally from each of them.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

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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 am Professor Emeritus at Florida Southern 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 CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

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I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

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DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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