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Anybody good with Taxes?!!
I have a question. My husband paid his parents 6 or so years ago (he was still living in their home) for several cows. His parents boarded them, paid the expenses etc. When they sold them this year, they skimmed expenses off the top and sent my husband the rest. My question is: How do I report this income in our taxes? Do I have to report it? Any way that it could be a gift?
Thu. Mar 13, 5:27pm
If it is over $10,000 and you consider it a gift - the parents may have to pay gift tax depending on what their estate might be worth on death.
If you go to IRS . gov, and search on livestock there should be forms and instructions for livestock.
If they have a farm or ranch - that could be quite an estate? So someone should decide whether to pay the tax now or later. Variables are - what might be the exempt amount of an estate be in the future? Tax rate?
Read up on livestock, gift tax and estate tax - then decide.
Thursday, March 13, 2008, 8:32 PM
Each parent can give their son $10,000 as a gift, and they can each give you $10,000 as a gift. So, if it's under $40,000, it can be a gift. If you have any children, they can each give each child $10,000 too. And the money that your husband gave to his parents 6 years ago could also have been a gift.
I don't know how much cows go for, but I doubt it's a large enough sum that you need to report it.
Friday, March 14, 2008, 2:17 PM
How many cows is "several"? You're probably okay. My dad set up a similar situation for my sisters and I to help us save for college when we were younger. We considered each heifer given us at the time a "gift" and then reported as misc. income the sale of the calves each year. When I graduated law school (I'm now a tax atty, btw, but this is not my area of specialty so buyer beware :), I "gifted" the three cows I owned at the time back to my parents and I was still under the gift maximum. During the intervening years, I had never really thought about the boarding and feeding costs my dad took care of for me, but looking back, those were so minimal that they also would easily be "gifts." Hope this helps!
Friday, March 14, 2008, 5:56 PM
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