gift of car, previous owner deceased

[Kea]

Client's father passed away last month. The client has inherited a $16K car that he doesn't need and wishes to give it to his aunt. The title is still in the dad's name. Can the "estate" give it to the aunt without filing a gift tax? Dad will not be making any more gifts and no longer has to worry about the lifetime maximum. Can the title convert directly to the aunt?

Or, does the title have to change to the son, first? Can the title change to the son and his wife at one time? If the title changes to joint ownership, then both can gift to the aunt without a gift tax. Or, to do this, does the title have to change to son, then to son and wife and then to aunt?

I know about the $13K per person gift tax rules. I'm just unclear on the necessary paper trail to show that no gift tax return is required. Or, do you just document intent without worrying about the names on the title?

Thanks

[TAXBILLY]

Your question is confusing. At first you say your client inherited the car and then you mention the estate.

If your client inherited the car I would imagine he would have to go to the DMV to transfer the title.

taxbilly

[michaelmars]

bene can disclaim his inheritance

as for the value how do you get 16m?

[Kea]

Client is only child and Dad left everything to the son. It is my understanding that nothing has gone through probate (or if it needs to). Title and insurance are still in Dad's name. The value of the car is what the client told me. I think he got it from a friend who works at a dealership. I'm sure he will get a more official figure before title transfer.

I'm just trying to help determine the best way to transfer title - and how many transfers are required to avoid gift tax return. I have no problem filing a gift tax, but I don't think the client wants to mess with it if there is an easy way to avoid it.

Thanks. I hope that makes more sense.

[jainen]

>>Can the "estate" give it to the aunt without filing a gift tax?<<

Your client owns the car and can give it to whomever he pleases. DMV will straighten out the title with little trouble. Disclaiming the inheritance won't work unless the intended recipient is next in line under state law.

Don't worry about gift tax. Although Blue Book might say 16K, if you think about it you will no doubt conclude that that particular model is not popular in your area, especially considering the condition it's in. Isn't it really worth only $11,999?

[TAXBILLY]

>>Isn't it really worth only $11,999?<<

$12,999 would work.

taxbilly

[Kea]

I'll let him know not to worry about it.

But for my own general knowledge - what are the documentation rules? If IRS were to ever question why a gift tax wasn't filed, is it sufficient to just explain why a gift over $13K is from 2 people or do you really have to dot all your "i's" and cross all your "t's"?

If the gift wasn't a car but a check for the $16K - how would that change the picture? Say everything else is the same. Bank account is still in deceased's name. OK for check to come from that account? Decedent files gift tax return, or the estate? Or, should check go to the son (who deposits it in joint account with wife) and then write check to the aunt? Or, does there need to be 2 checks - one from son and one from wife?

I just want to make sure I understand the documentation rules. I know the general rules and I know how to file the gift tax return.

Thanks

[jainen]

>>I understand the documentation<<

If it's not too burdensome, a better paper trail will usually be of some benefit. For the situation in this thread, I would worry more about other heirs than about the IRS.