Question about Gifting....

[FullOfIt]

I just realized I might have made a big mistake as far as filing goes. Last week we "gifted" a vehicle to my grandpa. He lost his home and both cars in a tornado and has no insurance (home or vehicles). In the same storm we got bad hail damage on our paid for car. We got an insurance check for 2800.00 and kept the money (paid bills). Didn't repair the car. When the tornado came through it was a very emotional time I felt so sad for him so we loaned it to my grandpa and then I just told him he could have it and transferred it to him. I just had to do something. It has 182000 miles and is worth no more than 1800.00. I truly did not do this to hide any asset. I did it because even in my situation I am better off than my grandpa. I now realize this could cause me a major problem. Will the value of the car play a role at all or am I more than likely going to have to wait this out? It was our only "asset". I don't even have jewelry or fancy electronics.

[LadyInTheRed]

Be sure to tell your attorney. It needs to be listed on your Statement of Financial Affairs. The trustee could ask your grandfather to return the car or pay for the value. If that happens, your grandfather can probably enter into a payment arrangement and you could make the payments for him. Or, your grandfather could say "come take the car" and hope the trustee is bluffing and doesn't want to bother with it. An attorney may be able to give you an idea of wether the local trustee(s) would be likely to take the car. Keep in mind, they will probably always tell you there is a risk. But, they might be willing rate how big the risk really is.

Other than that, making the gift won't get you into trouble or jeopardize your discharge as long as you disclose it in your petition.

ETA: If the trustee asks about this at the 341, be sure to tell him that you gave it to your grandpa after he lost everything in a tornado. I usually tell people not do offer any extra info at a 341. But, in this case, the trustee may be sympathetic and not pursue the car.

[tobee43]

another way to look at this is you gave it to charity. although not an established charity, the circumstances you gave the car away may be considered as a charitable contribution to a private party for unusual circumstances...such as all the donations that go to other victims of all these terrible disasters this county has been going through.

when we left i must openly admit we claimed 10's of thousands of dollars to charity which are still being carried over to our present returns. we had to leave much of our items so instead we gave much away to the county and state, but i also put an ad in the local paper FREE beautiful furniture those responding must be on general public assistance and be able to prove it, to claim. (only because i wanted to help those in the area in real need). i had them sign a receipt and submitted them with my tax return as a deduction on my charitable contributions.

there is a place on your petition which states if you gave more then X please attach a receipt and an explanation, we did and had no problem with our trustee at all. also, do not forget that you are generally allowed without it looking beyond reason to donate 10% of one's gross income. especially if it was a year one moved or whatever. for use it didn't look unusual because for 50 years we have always tithed 10% of our gross no matter how small or large the amount was.

oh! and this can really help you get a better tax refund if you itemize on your tax returns.

it might be worth doing a amendment on the return and getting a receipt from you grandpa.

best of luck to you!

[LadyInTheRed]

another way to look at this is you gave it to charity. although not an established charity, the circumstances you gave the car away may be considered as a charitable contribution to a private party for unusual circumstances...such as all the donations that go to other victims of all these terrible disasters this county has been going through.

when we left i must openly admit we claimed 10's of thousands of dollars to charity which are still being carried over to our present returns. we had to leave much of our items so instead we gave much away to the county and state, but i also put an ad in the local paper FREE beautiful furniture those responding must be on general public assistance and be able to prove it, to claim. (only because i wanted to help those in the area in real need). i had them sign a receipt and submitted them with my tax return as a deduction on my charitable contributions.

there is a place on your petition which states if you gave more then X please attach a receipt and an explanation, we did and had no problem with our trustee at all. also, do not forget that you are generally allowed without it looking beyond reason to donate 10% of one's gross income. especially if it was a year one moved or whatever. for use it didn't look unusual because for 50 years we have always tithed 10% of our gross no matter how small or large the amount was.

oh! and this can really help you get a better tax refund if you itemize on your tax returns.

it might be worth doing a amendment on the return and getting a receipt from you grandpa.

best of luck to you!

Just because deduction is "charitable" does not mean it qualifies for a charitable deduction. You can't get a charitable deduction on gift to anybody except an organization qualified by the IRS. You could be accused of tax fraud if you claim a gift to a family member or any individual as a charitable deduction, regardless of the reason for the gift. If your return had been audited, the deductions to individuals would have been disallowed.

From IRS Publication 526:

Disaster relief. You can deduct contributions for flood relief, hurricane relief, or other disaster relief to a qualified organization (defined under Organizations That Qualify To Receive Deductible Contributions). However, you cannot deduct contributions earmarked for relief of a particular individual or family.

While a trustee may be sympathetic to the situatuation and not go after the car, this is a gift to an insider that should be reported as such. It's purpose is irrelevant as far as the law is concerned.

[tobee43]

Just because deduction is "charitable" does not mean it qualifies for a charitable deduction. You can't get a charitable deduction on gift to anybody except an organization qualified by the IRS. You could be accused of tax fraud if you claim a gift to a family member or any individual as a charitable deduction, regardless of the reason for the gift. If your return had been audited, the deductions to individuals would have been disallowed.

From IRS Publication 526:

While a trustee may be sympathetic to the situatuation and not go after the car, this is a gift to an insider that should be reported as such. It's purpose is irrelevant as far as the law is concerned.

i stand corrected on the way i communicated the transfer of the goods, and completely forgot about that updated publication in the tax code. especially, in light of all the disasters in recent years, i know the tax laws have been revised. but what you have quoted is very clear, cut and dry and exactly to the point. our individual donations to those in need was suggested, i failed to mentioned, were sanctioned by a charity, by a county run group. i ran the ad, those that answered had to provide the proof, and then i submitted them directly to the established charity. they provided the actual receipt for tax purposes along with the signed receipt from the recipient. you are absolutely correct.

we never personally gave to any disasters victims individually, however, we didn't have any issues with the any other give aways, as you have clearly pointed out they must be under the umbrella of an established charity.

frankly, we had such a pile of contributions that year, i'm certain our trustee took a very careful eyeful audit, just based on the mere volume we submitted.

excellent find lady!