IRS will be looking for Gift Tax Returns

When one donor makes a gift in one calendar year of more than $13,000 to any one donee, the donor is required to file a federal gift tax return, form 709, with the IRS. The amount of the gift in excess of $13,000 to each donee will reduce the donor’s exemption equivalent, the amount the donor can give during life and at death combined without paying gift or estate tax. Only if the prior years taxable gifts plus the current year’s taxable gifts exceeds the donor’s exemption equivalent will there be an actual gift tax due with the return.
In Re Does is a case in which the U.S. District Court on December 15, 2011 granted the IRS permission to summons from the California Board of Equalization information on transfers of real property between nonspouse relatives. The IRS will then check and see whether gifts by these donors which were in excess of $13,000 were reported by the donors on gift tax returns.
The IRS was granted the summons in part because it presented to the court the results of a survey indicated that between 50% and 90% of individuals who transferred real property to their children or grandchildren for little or no consideration failed to file form 709. The court found this survey sufficient to support a reasonable belief of failed compliance by this class of taxpayers.

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About randyspiro

I am a super lawyer in California with dual specialization in Estate Planning and Taxation.
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