Would be very grateful for some informed opininons/pointers about what are probable estate tax planning and also income tax implications/solutions - and, preferably, cites to sources - that address the following:
--------------- FACT ASSUMPTIONS:
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SCENARIO/QUESTIONS:
The high-income taxpayer's mother - who has only recently become eligible for Medicare, is not eligible for SSI or SSD benefits, and who, because of recent years of non-employment, will be receiving only a comparatively very small amount of social security - is very seriously debilitated and disabled by a severe combination of physical and mental illnesses which require rehabilitative therapy and caretaking expenses that probably will be needed over a period of years and which this year alone have included non-insured hospitable bills of more than $10,000 and (residential and rehabilitative) nursing home care exceeding $20,000 which the taxpayer has paid on her parent's behalf.
The parent, who presumptively will have a comparatively long life span despite her debilitated medical condition, owns jointly with her also unemployed and unemployable husband substantially less than $425K in marketable securities plus a one-family residence owned jointly with him, and has no source of income or ability to generate income other than from recently and foreseeably decreasing interest earned on the securities or, perhaps, from spending portions of that capital plus borrowings as against the equity in the residence which, however, if done, and if the other assets are spent down, would leave whichever survives of the spouses without assets or (but for the questions posed here) income.
The daughter/taxpayer, who does not presently have a contractual or other law imposed obligation financially to support her mother, has reason to believe that she will continue to be able and is willing to pay for her mother's needed in-home or even nursing home care not covered by Medicare and, in addition, also to provide an income to the parent in the +/- $50K annual range - considerations which, however, raise at least these questions (plus any others that informed folk here may suggest) -
If the funds supplied to or on behalf of the parent constitute more than fifty percent of her mother's support/maintenance, to what if any extent are they deductible from the taxpayer's income taxes?
If the funds supplied to or on behalf of the parent constitute more than fifty percent of her mother's support/maintenance and are not presently deductible from the taxpayer's income taxes, what if anything lawfully can be done to achieve such deductibility?
Bearing that the taxpayer already this year has expended on behalf of her mother and mother's husband more than $22,000, although she had not given each $11,000 directly, how if at all can the taxpayer lawfully avoid having the IRS later claim that payments to the parent or to third-party health care providers, etc., on the parent's behalf are not gifts that eat into the Unified Tax Credit (thus, if such a claim were to be made, interfering with what the taxpayer would like eventually to leave to her young children and spouse) - or is this a moot question and, if so, why?
Thanks very much!