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Non
arms length exceptions are
everywhere. Related, associated,
affiliated, connected,
controlled, terminology is way
beyond many taxpayers
experience.
You're
not alone if you can't seem to
get clients or family to believe
disclosing inter-family money
transfers whether it's gifts,
loans to children under 18,
loans to purchase income
producing assets or businesses
over 18 is required because
there are rules about
attribution of income when
property ownership is divided
among related persons or
parties.
We
aren't being nosy. It is our
business. We are attempting
to establish evidence, and
document transactions to protect
you from a tax audit. If you
lend or gift money, or gift
assets to relatives, there may
be long term tax consequences,
depenidng on the circumstances,
and the ages of the
parties.
Asking
what happens if you die, and one
child owes you money, and the
other child lent you the money
when you were short of funds,
those are tax related queries.
Have you thought
through, exactly
how will it play out for the
kids when it comes time to
sorting out who gets what from
the estate? People wonder how
families fall apart. It's the
money, and the tax
consequences...
"Eileen,
your clients should be
thanking you for taking the
initiative. Take that from
someone who spends his time
(at least in part)
attempting to clean up
messes of the kind you are
trying to anticipate. You
might consider finding some
Tax Court cases, or estate
dispute cases, that arose
because of the issues you
identify. Make those cases
required reading for your
clients..."
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