Gift Tax - SBA Deal

by a searcher

Mar 07,2023

Working on a deal right now and trying to manage taxes effectively. 

Parents are providing majority of the downpayment for my SBA deal as a gift. Putting around 700k-1 mill total. 

I have heard that a gift tax that can be triggered. Does anyone have any information on this? 

I have not been gifted any money in the past. Could I utilize form 709? Would appreciate any help or clarity on this.

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professional from Rice University

Actually it would be your parents that would need to submit the form 709 if you classify as a gift. There are many other ways to effect what you are trying to achieve. And note, there are 2 sides to the tax liability - your parents as provider and you (assume sole proprietor) as receiver.

03/08/2023 | like reply | 0 likes

searcher from State University of New York (SUNY)

Not sure about the gift tax specifically. Instead of the intermediate step of having them gift you the money, which may trigger a taxable event, couldn’t you have your parents buy 19% of the equity for $700k or any amount and you contribute some nominal amount, but retain 81% of the common? Important to keep them under 20% common ownership to avoid the PG.

03/07/2023 | like reply | 2 likes

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