Getting audited for cash gifting?

Question

Some people say cash gifting is legal others say its not. I did some research and its legal for somebody to receive $12,000 a year per person.

My question is say if one was to be successful with this program and one bought a new car and a house would the IRS audit that person or can they claim all the money is coming from "gifts?"

Answer 1

If you get audited, you couldn't just say "well, the money was all from cash gifts" - you'd have to say who they were from, and yes the auditor would check if they questioned whether you were being truthful.

Answer 2

when you engage in cash gifting you will be required to get all the people who give gifts to to you to sign a some statements. This will keep you in order incase of an audit.

If you would like more info on the program I am currently in feel free to visit http://www.papertrail.tv we have been around for 8 years and span 16 countries.

Answer 3

Considering the reports that the FBI is currently doing a sweep rounding up cash gifters, I would say you've been listening to the wrong legal advisors.

For that matter, look up David Myrland (I think that was his name) and note how he got convicted in four states for telling organizations that cash gifting was a legal practice.

Answer 4

For Federal tax purposes you may receive any amount as a gift without any tax consequences.  The issue regarding audits comes up when the IRS sees for example a large mortgage interest deduction with a small reported income.  I have a client that has about $30,000 in reported income but he received several thousand dollars inheritance.  His spending habits may well trigger an audit.  But he has clear proof of the source of the nontaxable income.  So keep very clear records of how you received any tax free money and make sure that the rest of your return is clean and you will have no problem.  However you should not fall for any of these gifting schemes you find on the Internet.

Answer 5

you have to be able to prove that the money was all from gifts, though checks, statements from others. if the IRS comes and wants proof you have to be able to supple it. if you say it is from a friend who gave to 12K they will then go to the friend and go though their books to see if the 12k gift can be proved out.

Answer 6

Sure you can claim that the money is form gifts. However, you may need to provide list of donors with SSN.

Read http://taxipay.blogspot.com/2008/03/us-g...