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Can I Get Away With Giving Personal Items To My Children Without Reporting Those Gifts For Gift Or Estate Tax Purposes?

Family is the greatest gift in life

Why do People Ask this Question?

Many people are surprised to find that a gift of an expensive piece of jewelry or painting to a child requires the filing of a gift tax return, use of annual exclusion and unified credit, and perhaps even the payment of gift (or at death estate) tax.  This doesn’t really seem “fair” to people.  They understand that transfer of stocks and bonds, the family business, or real property should be subject to transfer taxes – but these types of gifts just don’t feel like they should be caught by the transfer tax system.  Make no mistake about it though – they are.

Nevertheless, even when informed of this rule, people often think “I’ll just slip my ring to my daughter on my death bed – no one will find out”.  People know that others do it – why shouldn’t they?

Will you Get Caught

Even if people know that such gifts of personal property are required to be reported on gift tax returns when given during life, or on an estate tax return if owned by a decedent at death but the children come in and take those items immediately after a parent passes – but the real question people are asking is “will I be able to get away with this?”.  Understanding how IRS audits an estate tax return is important in determining the answer to this question.


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