People sometimes wonder whether the IRS would really go back looking for old gift tax returns that weren’t filed.
Most people know they’re supposed to file a gift tax return when the total gift to anyone exceeds the annual exclusion amount, which is $14,000 for 2013. But since an individual doesn’t actually have to pay any gift tax until that person’s lifetime taxable gifts accumulate to more than $5.25 million (in 2013), the question about gift tax returns crops up.
Ask that question to Sumner Redstone, the chairman of Viacom and CBS. According to the IRS, Redstone made a taxable gift to his children and failed to file a return – in 1972. Now, 41 years later, the IRS is asking for that return.
According to a petition Redstone filed with the Tax Court, the IRS says that he owes $1.1 million in taxes – plus penalties, plus interest – because of the gift. The case involves stock in the family’s National Amusements Inc., received by Redstone’s son Brent and his daughter Shari after the settlement of an intrafamily lawsuit.
Redstone maintains that no gift occurred. Instead, what the IRS called a taxable gift was an “ordinary business transaction.”
For more details, see Redstone v. Commissioner, T.C., No. 008097-13.
This case also makes you think twice before tossing those old tax records that you think you won’t need anymore.
“President Obama wants to close the Guantanamo Bay prison facility, but he doesn’t know how to do it. He should declare it a small business and tax it out of existence.” Jay Leno