October 30, 2006
Eliot Spitzer and the Gift Tax
Interesting article in the Sunday New York Daily News: Empire of the Son, by Douglas Feiden:
Spitzer has lived rent-free with his family at 985 Fifth Ave. for 13 years. The 25-story tower off 79th St. has just two apartments per floor and terraces that look down at the Metropolitan Museum of Art....Thanks to his dad's generosity, Spitzer, his wife and three daughters have lived in a home graced with at least three bedrooms, four baths, a balcony, library and sweeping vistas of Central Park....
Vetted by lawyers and accountants, the living arrangement is both lawful and proper, said Darren Dopp, Spitzer's communications director: The father pays an annual gift tax on the present he gives his son. "These and other financial matters are handled by professionals who ensure that everything is done in strict accordance with city, state and federal law," Dopp said. The market value of the gift is reported annually on real estate tax filings and on Bernard Spitzer's tax returns. But citing privacy, Dopp declined to disclose the apartment's rent, the gift's value or the amount of the gift tax paid. Three real estate brokers familiar with the building say that a spread of comparable size could lease for $16,000 to $20,000 a month. That puts the gift's current value at an estimated $192,000 to $240,000 a year.
(Hat tip: Bob Hayes.)
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With thanks to Insta, here's candidate for NY Governor Spitzer's stand on housing in NY State: New York State's housing crisis threatens to strangle our potential for economic growth and crush the dreams of many families. New York State consistently... [Read More]
Tracked on Oct 30, 2006 3:15:10 PM
There is nothing wrong with parents providing housing for their adult children. Indeed, for parents with the wealth to do so, providing housing for their adult children might allow those children to pursue careers in public service -- which could be considered a good thing.
However, from a tax perspective, it would be interesting to see how the gift is being reported. Does Eliot Spitzer's father claim one annual gift tax exclusion (counting the gift of housing to be made just to Eliot) or does he claim five annual gift tax exclusions (counting the gift of housing to be made to all members of Eliot's family)? Counting each member of Eliot's family as a recipient of the gift would reduce the amount of the taxable gift to a negligible amount (particularly if Eliot's father and mother split gifts). The potential problem with treating each member of the family as receiving the gift is that, in most states, parents are required to provide for their minor children's housing. If that is the case in New York, it would be hard to justify counting Eliot's daughters as recipients of the gift for annual exclusion purposes.
Posted by: David Walser | Oct 30, 2006 11:02:22 AM
So what? Wouldn't we all like to have a rich daddy.
Posted by: FElix | Oct 30, 2006 11:19:20 AM
So what's the big deal? Can't a father help his son?
Posted by: e olson | Oct 30, 2006 2:24:47 PM
Help is co-signing a loan or giving a cash gift as part of a down payment on your son's first place. This arrangement goes beyond that. God help the state of New York if he gets elected. He has no idea how the other half lives.
Posted by: Elroy Jetson | Oct 30, 2006 4:48:38 PM
It's a lot easier to tax people into the stone age when somebody else pays your bills.
Posted by: Bandit | Oct 31, 2006 8:16:47 AM
Why are you people even considering this? Don't you know that the conduct of an attorney, especially a prosecutor, is never unethical, illegal, immoral, or worthy of an investigation?
Posted by: LegalCynic | Nov 3, 2006 4:28:45 PM