Question

Is there a completed gift in the following example? Explain.

a) Ron Donovan paid $39,000 for a new car and gave the car (transferred title and keys) to his 16 year old son

b) The father established a joint account for himself and Arlo, his son. Under the account, either can withdraw the funds.

Answer 1

A) In the given example, this is a case of completed gift as the father has gifted the car without any appropriate amount of money being paid in exchange of that car. But it is not taxable as the gift is received from a related party.

B) Adding a child in a joint account, is not considered as completed gift. In case, if the child individually signs for the withdrawal then it will fall under the case of completed gift. But if both the joint account holders signs for the withdrawal then they can be prevented from unnecessary tax implications.