Brown & Streza Blog
Jan 31

Written by: David Keligian
1/31/2012 3:55 PM  RssIcon

The IRS recently won a court argument allowing it to summons property transfer records from the California State Board of Equalization. The IRS is searching for unreported taxable gifts. This move, like so many others by the IRS and the Franchise Tax Board, are parts of ongoing attempts to grab the lowest hanging fruit on the tree to bring in more tax revenue.

Especially in Southern California, many parents end up providing assistance to their children with home purchases. They sometimes take joint title to homes to help their children qualify for loans, or take sole title to the home then transfer title to the children at some future point.

Right now, the IRS appears to be looking at people who transferred real property for no consideration to children and grandchildren from January 1, 2005 through December 31, 2010. However, in estate tax audits, we’ve seen auditors go back through all of someone’s recorded property transfers (sometimes for more than 20 years) attempting to find transfers of real estate that were not reported as gifts.

This development is a cautionary tale to people who try “do it yourself” estate and gift tax planning. In this electronic age, more and more assets (such as stocks, where new basis reporting rules are going into effect) can be more easily traced.

We’d be glad to assist if you have any questions or concerns regarding this issue.

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