AboutMike Wellman Expertise I was a former Manager with Price Waterhouse, now PricewaterhouseCoopers, the largest accounting firm in the world. I have had clients in almost every industry and of every size. I will only answer questions dealing with IRS problems such as delinquent tax returns, Offers in Compromise (Tax Settlement), IRS collection matters including installment agreements, liens, levies, seizures, audits, appeals, innocent spouse claims and injured spouse claims. All others will be referred to the question pool.
Experience Over 25 years experience in taxation specializing in IRS collections, examinations and appeals.
Publications New York Times, Wall Street Journal, You Money Magazine
Education/Credentials BBA, Baylor University.
Awards and Honors My website http://www.IRSOS.com won the Knowledgeweb award for educational excellence for content.
Expert: Mike Wellman Date: 10/12/2007 Subject: avoiding taxes
Question QUESTION: I am join owner of a house with my brothers. My brother is going to give me my share in cash - $300,000.00 He has it in various CD's and will give it to me as the CD's mature. But I don't want to loose half of it to taxes. Can my name be put onto his CD. And then can I take the money from the CD tax free as if I had been the one that put it there? I want to put it into a Bond fund to generate regular premiums. Can we avoid taxes if it is given as a gift and not as payment against the house?
ANSWER: Gifts are not taxable to the receiver. Your brother will have to file a gift tax return however. He may not owe any taxes since he has a lifetime exemption of $1,000,000 he can give away tax free.
He can also give $12,000 per person per year with no gift tax filing requirements. This is over an above the $1,000,000 exemption.
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QUESTION: Would my idea with the CD work?
If not, would it work to accept the money from him as a gift and then in a personal statement to him and another brother (there are 3 of us as joint owners)state that upon sale of the house I will make a $300,000.00 gift to my first brother.
Answer If you are being paid $300,000 for your share of the house, you would not have any interest in the later sale to give to your brother. I do not think the bank will let you simply change the names on a CD. I also think doing this could place a lot of scrutiny on the transaction. If it is a simple gift, there is no need for the cloak and dagger.
