Epic Real Estate Investing - The Tax Advantages of Giving Gifts | 497

Episode Date: October 16, 2018

Learn how giving gifts to your children can be 100% legally non-taxable! Discover your key action when making charitable contributions and how to control the non-taxable gifts granted to children. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey, Rockstar, if you have a question here for Tim that you'd like him to answer on the show, anything tax-related, anything asset protection related, go to taxhacker.com forward slash questions. Post your question there and then we'll answer it live right here on Tax Hacker Tuesday. Enjoy the show. This is Terrio Media. Did you know that up to 50% of your lifetime income will be wiped out by taxes? What if you could stop this madness? Isn't it about time you play on a level playing field with the wealthiest 1%?

Now you can. Tim Berry, attorney at law, shares here each and every week current tactics and strategies that anyone can implement to hack the tax code. Protect your assets and keep what's rightfully yours. It's time for Tax Hacker Tuesday. Hey, I want to talk about four concepts. Okay. First concept, year-end tax planning.

Estate planning, charitable gifts, and gifts to your children. Can you speak intelligently on all of those? Sure, they're all the same concept, really. At the end of the day, they're pretty much the exact same thing. What Bernie's talking about is December 31st is looming large. It's coming up really fast. And in order for you to make completed gifts for either the tax donations for a charitable contribution or the gift tax savings for the kids,

you've got to make those gifts completed by December 31st. Is that what you were talking about? That's what I was talking about. Okay, and so why would somebody want to make a gift of charity, for example, besides helping out their favorite charitable cause? Let me see. Would a tax deduction be appropriate? Tax deduction.

So you can grant all sorts of tax deductions by making the charitable contributions, but here's the big thing. Bernie, the other day, what were you talking about, the key thing for people to do whenever they're making charitable contributions? to make sure that they get the tax deduction and the other people get the tax consequences. Very profound. To make sure the individual giving the gift gets the tax deduction and the other people get the tax consequences.

Now, what's Bernie mean by that? Am I going to translate or are you going to explain it? No, what do I mean? Well, here's the thing. Well, let me ask you a question. Yeah. If I have $100,000 in stock and my basis that I paid for it is $50,000, you know, Tim, I can sell that stock and then I can give that $100,000 to the charity.

Is there a better way to do it than that? Yeah, because if you sell that stock, you're going to have a tax hit of probably about $7,500. Roughly, it depends on a bunch of different situations, but let's say that's going to cost you $7,500 bucks in taxes. If instead you just give the stock itself directly to the charity, you don't get hit with the tax bill, the charity, the nonprofit, the tax-exempt entity,

gets hit with a tax bill. And since it's tax-exempt, it doesn't have to pay taxes. And you still get the same hundred. thousand dollar deduction so that's the better way to give to a charity is by giving appreciated assets to your favorite charity and this is all had to do with tax planning for the end of the year and any other year that you may want it now what about giving giving dollars and dollars and dollars to your children outright how much you how much can you give to your children each year well you can

give to the kids each year about fourteen thousand dollars and I say about using the weasel word about because that's index for inflation 2015's coming up it may or may not go up at that point in time but each year you're allowed to give each person who you want to $14,000 without there being a gift tax hit so if you're married and you have one kid husband and wife 14,000 each can give 28,000 to their kid if they only have one kid if they have two kids that'd be 56,000 tax free tax free no income taxes either think about this for a minute. If you gave that amount to the children on 11 p.m. on December 31st, and can you give the same amount on January the 1st, the morning of January the 1st?

Absolutely. You could. What a great stocking stuffer, huh? Well, but here's the problem. You know, those children may go out and spend all that money, which and mom and dad may want that. However, what about if mom and dad wants to make that gift, the non-taxable gift, but want a little control over what the children's, can do or not do it. What happens then? It's all about that key phrase control versus ownership. What mom and dad could do is they can set up a trust, put the assets into the trust, give the assets into the trust for the benefit of the kids, use up that gift tax exclusion, and yet mom and dad can still control the trust, be the trustee's of the trust. So if the kids go out there

and do any of the stuff I did as a kid, mom and dad can yank the money right back. And is it fair to say that you have done this in some of your family matters? Well, Bernie, it's really funny you say that because here's the thing is if you set up the trust properly, it's taxable to the kids. I have a daughter who doesn't live in the People's Republic of California. And so my daughter has certain assets inside of a trust for her benefit that is not subject to taxation in California now. It's a wonderful thing. You know, it goes back to what we said, the last podcast. What we advise people to do, first of all, is totally legal. And second of all, We implement our own plans.

We implement all the information that you're getting today has been implemented by our staff and the principals involved here. So it's a good thing, isn't it? You Martha Stewart? And Martha Stewart is a good thing. It's better than Lois Learner, isn't it? It is, sir. It is. Anyway, those words of wisdom, I think it's what we call it a wrap.

Well, we're talking about gifts, aren't we? So it should be a nice little bow and wrapped up. wrap and a bow and everything. Anyway, you have it. It's legal. It's tax planning. It's a year-in tax planning. It's estate planning.

And it's gifting to children, non-taxable, and also in a way that if you want, it could be controlled and yet have the tax situations that are favorable to you. So, Tim, until next time, we got that gift wrapped. There you are, folks. It's a wrap. Thank you, everyone.

That's it for today. dream of a tax system that works just for you. But until then, you have Tim Berry. See you next Tuesday for another episode of Tax Hacker Tuesday. Hey, whenever you're ready to have Tim customize a tax hacker blueprint for you, a special custom blueprint just for you, go to taxhacker.com, answer a few questions about your situation. Tell Tim what you'd like to have happen. And then his team, they'll take it from there. And then he'll give you a copy of his free book, his free book all around Trump's new tax plan. typically what the press isn't telling you.

So go to taxhacker.com and we'll see you right here next week, taxhacker.com. Take care. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.