tag:blogger.com,1999:blog-15517294.post950891902629125537..comments2024-03-02T02:56:02.147-05:00Comments on RUBIN ON TAX: New Case on Loan vs. GiftCharles (Chuck) Rubinhttp://www.blogger.com/profile/07227879267908481649noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-15517294.post-91899752604935409802020-09-24T19:55:21.328-05:002020-09-24T19:55:21.328-05:00A loan makes sense when the parent doesn't hav...A loan makes sense when the parent doesn't have sufficient unified credit exemption left to avoid gift tax, or otherwise doesn't want to use whatever exemption exists. So if they color it as a loan, they want it to stand up as a loan, which is what the case is about.<br /><br />Designating it as a skip on a return means that it was a taxable transfer and not a loan, and that would thus defeat the planning. So I'm not sure how that would help on this particular issue.<br /><br />As noted, if the parent has enough exemption, then they could do a straight gift and avoid a loan, and use the exemption before the exemption amount potentially gets reduced in the future. If the transfer is made to a dynasty-type trust, and GST exemption is allocated, then that will allow the trust to continue down the generations until consumed without a transfer tax.Charles (Chuck) Rubinhttps://www.blogger.com/profile/07227879267908481649noreply@blogger.comtag:blogger.com,1999:blog-15517294.post-56914277607177211262020-09-24T05:08:48.040-05:002020-09-24T05:08:48.040-05:00In the above case what if the parents originally d...In the above case what if the parents originally designated it as a Generation-skipping transfer (Form-709). Would that have eliminated the problem.<br />If so could you address this specifically as many of us are at that age where we would like to dispense of significant cash holdings to our adult children/gran-kids without generating a taxable event per se.<br />Regards<br />Pat LewisAnonymoushttps://www.blogger.com/profile/00391638238837762461noreply@blogger.com