My family sold a property overseas. They decided they want to give me and my siblings a cash gift of about $40K. They also designated me as the person to receive the money and then distribute it equally. Of course, I think the bank will report this money to the IRS once it is wired to my bank account. What is the best way to handle this issue ? I hate to have to pay taxes on the entire amount when I will only keep a small part of it (my share). What steps can I take to protect myself from having to pay more taxes than I have to ? Thanks for your help !

To begin with, there are NO transfer taxes in the U.S. and the amount transferred ($40,000) is BELOW the reporting threshold for submission of Form 3520.

Any gift tax reporting is a requirement of the GIVER, NOT the recipient, so you can accept and distribute the money in accordance with the family wishes with no tax reporting or consequence.

To begin with, there are NO transfer taxes in the U.S. and the amount transferred ($40,000) is BELOW the reporting threshold for submission of Form 3520.

Any gift tax reporting is a requirement of the GIVER, NOT the recipient, so you can accept and distribute the money in accordance with the family wishes with no tax reporting or consequence.


Thank you. But don't you think re-gifting this money by me to my siblings is a totally different animal ? I know the gift limit is $14K per year. If I pay more than $14K per year (which I am going to have to do), what kind of taxes we have to pay and who pays it ? For example, If I give $14K to sibling #1 and another $14k to sibling #2... that's a total of $28k way above the $14k threshold. What happens there ?

The donor can make unlimited gifts per year of 14K as long as each recipient is a different person.

Joy has it right; the $14K limit is per gift per person.

Assuming at least two siblings, each transfer will be well below the $14K limit.

It is quite unusual for your family to have you distribute the cash to your siblings. Why are they doing this? Having money flow through your account that isn't really yours smells odd. Why didn't your family just transfer the cash to you and your siblings directly?

I support IntlTax's posts; he has always been nothing but professional, and has OFTEN brought up points that has NOT been considered.

IntlTax, it may be just a simple case of ignorance of U.S. tax law on the part of the family, or maybe just simple laziness. For the amount in question ($40K), I doubt if there is anything shady.

I have had this happen to clients before. Simply redistributing funds, even through your own account, is not in itself a gift -

While there are many definitions of a "gift," the gift tax regulations define it as "any transaction in which an interest in property is gratuitously passed or conferred upon another, regardless of the means or device employed. . ."

And - The tax applies only to a transfer of a beneficial interest in property. Gift tax does not apply to a transfer of bare legal title

However, explaining this to the IRS might be a needless hassle. If the amounts you will have to distribute are more than $14,000 per recipient/per year, in my opinion, it is prudent to avoid the situation you are describing. It looks like in this case the latter is not true so you are fine, but be warned for the future and discuss this with your foreign friends. Perhaps the other contributors might have more to say on this. Hope that helps.