[WSBARP] who pays the tax on gain?

Sat Apr 10 12:24:14 PDT 2021

Thanks for your thoughts.  The mother did not contribute any funds or
receive any income from this rental property which is in the mothers
name.They now want to sell it.  Mother doesn't want to gift it to the
daughter because that subtracts from her exemption as a gift. Mother does
not want any tax liability.  Since the 1099s go to all owners and the
mother is the only owner she would have the entire liability.  Could a
trust of some kind be created with the daughter as a beneficiary?
*DOUGLAS W. SCOTT*
Rainier Legal Advocates|LLC

465 Rainier Blvd. N., Suite C
Issaquah, Washington 98027
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On Sat, Apr 10, 2021 at 11:49 AM John J. Sullivan <sullaw at comcast.net>
wrote:

> Doug:
>
> I haven’t been able to definitively research this. Somewhat surprisingly a
> quick answer did not pop up.
>
> Here’s my two cents worth as a tax attorney.
>
> Did the parents help with the down payment or mortgage or other expenses?
> They are presumed to own 50/50 unless otherwise established.
>
> On sale, the daughter may be eligible for the gain exclusion on the sale
> of a primary residence, assuming she qualifies under the ownership and
> residence tests. The parents’ capital gain is on investment property,
> assuming no treatment as a rental. They probably report on their separate
> returns and a 1099 goes to all owners.
>
> I would be careful about a pre-sale gift. That would mean the daughter
> would recognize 100% of the gain. Does it exceed her $250K exemption? Also,
> I am not sure she would qualify for it on the gifted portion because she
> has neither owned nor resides in that portion long enough.
>
> I would suggest they consult a tax attorney/CPA. And consider either
> having the daughter make a gift of the tax the sale adds to the parents
> return, or, if they don’t want the gain on sale, they can gift their share
> of the gain net of the taxes.
>
> Just an early Saturday morning first draft of an analysis without thorough
> research.
>
> John J. Sullivan
>
> Sent from my iPhone
>
> On Apr 10, 2021, at 10:52 AM, Kaitlyn Jackson <kaitlyn at dimensionlaw.com>
> wrote:
>
> Cant the parents just quit claim deed the house to the daughter as a
> gift?
>
> Sent from my iPhone
>
> On Apr 9, 2021, at 11:14 AM, Douglas Scott <doug at rainieradvocates.com>
> wrote:
>
> 
> Parents buy a house for their daughter.  All 3 are on title, but parents
> want nothing to do with the house.  Upon the sale of the house the parents
> don't want any tax liability. How do the parents avoid this and which one
> of them (or all) get the 1099S?  Is it whoever gets the payment?
>
> *DOUGLAS W. SCOTT*
> Rainier Legal Advocates|LLC
>
> 465 Rainier Blvd. N., Suite C
> Issaquah, Washington 98027
> 425.392.8550 (tel)
> 425.392.2829 (fax)
>
>
>
> www.rainieradvocates.com
>
>
> Notice: This communication, including attachments, may contain
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