Posted by James (Ala) on April 30, 2008 at 08:22:16:
If by “private cash payment” you mean one that is not reported, then you are in the realm of tax evasion. Otherwise, people would always put $10 on the deed as the purchase price and no one would ever have to pay capital gains.
Check with your tax preparer to see if your basis is taken from the value on the date your parents received the property or the date it was gifted to you.
James (Ala)
Is this legal or tax evasion - Posted by Robert
Posted by Robert on April 30, 2008 at 07:25:04:
I want to sell land that was gifted to me by my parents 15 years ago. To avoid hefty capital gains tax, could I sell the land for a fraction of it’s current value and accept a private cash payment from the buyer at closing?
Re: Is this legal or tax evasion - Posted by Bill Jacobsen
Posted by Bill Jacobsen on April 30, 2008 at 11:43:00:
If by gifted you mean while your parents were alive, then you accept your parents’ basis. If you accept a cash payment from the buyer you would want to characterize it as a gift from the buyers. No one would accept that answer during an audit. Also the buyers would now have a much smaller basis on the property which could have tax consequences down the road. Also, they would have to figure out how to gift you money without having tax conseuences for them.
Bill