IRS pursues gift tax cheats

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in Small Business Tax,Small Business Tax Deduction Strategies

A new district court case could lead to more IRS snooping into gift taxes. The court ordered the state of California to disclose to the IRS the names of individuals who have transferred real estate for little or no money to family members.

The IRS intends to use the info to check whether Form 709, U.S. Gift (and Generation-Skipping Transfer) Tax Return, was properly filed. It estimates that more than half of these gifts go unreported. (In the Matter of the Tax Liabilities of John Does, DC-Calif., No. 2:10-mc-00130-MCE-EFB, 12/15/11)

Note: If the value of a gift exceeds $13,000, it should be reported on Form 709, even if there’s no gift tax liability.

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