I had a question about a scenario that may not apply to all of you. It may apply to those who are first generation immigrants with family back home in their native countries. I am curious if anyone here has any ideas or comments.
Sometime ago a close relative suggested:
"Gift post-tax money from USA to a relative in your native country (eg, father who lives in india/china), the receiver invests the money in home country under his name, pays taxes (takes advantage of good interest rates at banks, low capital-gain taxes in equities and good real estate returns) and gifts it back to you after a few years. You do not pay any taxes on the gift as taxes were already payed in the other country."
Lets assume for the sake of discussion the relative is trustworthy and wont run away with your money.
I am aware of the annual gift exclusion amount below 14k and life time exemption of estate and gift taxes below 5.4 million. Also IRS form 3520 needs to be filed when accepting a gift of >100K $ from a foreign person. However these are just IRS reporting requirements and do not imply any taxation.
Can it be considered a "gift" at the first place if you get "gift" from the same person in the future? If the answer is no, what if the money changes hands in the native country and comes back to you as a gift from someone else? What are the other issues with such transactions?
Sometime ago a close relative suggested:
"Gift post-tax money from USA to a relative in your native country (eg, father who lives in india/china), the receiver invests the money in home country under his name, pays taxes (takes advantage of good interest rates at banks, low capital-gain taxes in equities and good real estate returns) and gifts it back to you after a few years. You do not pay any taxes on the gift as taxes were already payed in the other country."
Lets assume for the sake of discussion the relative is trustworthy and wont run away with your money.
I am aware of the annual gift exclusion amount below 14k and life time exemption of estate and gift taxes below 5.4 million. Also IRS form 3520 needs to be filed when accepting a gift of >100K $ from a foreign person. However these are just IRS reporting requirements and do not imply any taxation.
Can it be considered a "gift" at the first place if you get "gift" from the same person in the future? If the answer is no, what if the money changes hands in the native country and comes back to you as a gift from someone else? What are the other issues with such transactions?
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