Receiving Property Ownership as a Gift

To ease the burden of inheritance taxes, I am wondering if a parent can give a gift of $10K per year to a child in the form of an interest in a property.
Say that the parent owns a home worth $2M on today's market value. Can the parent give $10K worth of the property to the child each year and escape any tax obligations to parent or child on that gift?
When the property is sold, I assume the child must then pay capital gains on the full property value he owns, with the basis for his portion adjusted to $0 since he paid nothing for it?
Some questions on the gift are:
- Since property values go up and go down, how does one document the transfer of equity in a form that is suitable to the IRS?
- Is there any step that should be taken with the county recorder's office to document the child's partial ownership of the property, and does it matter that this gets updated timely once each year, or can it be done periodically (say every 10 years).
- Does the gift need to be reported on a Federal or (California) State tax return by the parent? What is the tax consequence if the gift (at or under $10K per year) is not reported on the return?
- If the parents have a trust that owns the property, how does this affect the above scenario?
I will of course consult a professional in estate planning but want to have well thought out and considered facts and questions before I enter into that discussion.
--
Will



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Yes, but it's $12K per year, per person. But that means other gifts would have to not be given (birthday, Christmas, etc) without tripping the gift tax return requirement.

Basis of teh parent transfers to the child.
FYI: This is generally handled through some form of family trust. If this is an issue for a real situation, consult a tax attorney familiar with estate and gifting issues.
--
Paul A. Thomas, CPA
Athens, Georgia
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