Gift tax returns on spouse gifts?

Question

I will spare you the details on why I want to do this, but I want to give my wife a brokerage account in my name and take one from her. (has to do with estate taxes and portfolio diversification...)

My accountant says I have to file gift tax returns for these, eventhough they are not taxable, to document how we came to have them.

This seems silly to me, but that doesn't mean it isn't necessary. Whatcha think?

Obviously we could just liquidate them and reinvest to simulate a trade, but I expect the transaction fees will cost more than the tax returns.

Stuart Bronstein · Accepted Answer

I'm interested in the details. Without them it sounds like a pretty screwy way to do estate planning and portfolio diversification.

Again, it depends on the background facts. Technically a gift tax return is not necessary. But if you are doing something that's not quite legitimate and you want the statute of limitations to start running on the IRS's ability to audit you later, filing gift tax returns might be helpful.

Whether it's a trade (in which you might incur income tax) or a gift, liquidating and reinvesting is probably unnecessary to the legal issue you are addressing, so you should decide on whether to do that separately.

Stu

Gift tax returns on spouse gifts?

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