Iowa Recruiting weekend
- Thread starter HawkTalk3
- Start date
Year one they own 20% and add 20% per year until year 5. It's definitely possible. Some of these NIL deals are worth some big $
Not that I’m not intrigued but kids would rather just have the cash than speculate on real estate. Especially those kids who don’t come from money. 20% of something just doesn’t spend.
This is Iowa City not NY. I just looked up property taxes on a $200k house in Iowa City looks like on average it’s around $3500/yr. Rent out one BR for $350 a month that’s $4200/yr. Property taxes covered.
Over your head. Hes talking about the gift/equitable gains tax on receiving a $200k asset as a gift. Uncle Sam doesn’t let one away without a serious taste. Would likely be more than $50k I’m not a tax guy but 40% most likely.
Touché. That part did get by me. I was thinking property taxes. My bad but wouldn’t it be the same gains tax on 200k no matter how that 200k was received?
How did you not even read the post you replied to? Lol. I will type slower and use caps this time.
NOT THE PROPERTY TAXES.
😉
Friday night is my excuse. Please continue to type slower for me.
Pretty sure that as long as he lived in house as primary residence for 2 years, he could have gains of $250K (if single) upon sale and not pay any capital gains tax. Since he got it for $0, he can sell for $250K and not pay. Sell it for $300K and he'd pay tax on $50K, probably 15 or 20%. I'll take that deal any day if anybody wants to give me a house.
Edit to add: The above principal would apply to other property like a truck or boat too. If you are just paid NIL cash, say for doing a commercial for truck company or for use of your name/face, it is regular income and taxed at whatever income bracket you end up in. At least I think.....
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El Dub would be glad to give you a house, but it would probably be a stash house.
I'm no accountant. I was just thinking of ways to make NIL more about the future instead of the now
Oh, but how true it is that "youth is wasted on the young" (George Bernard Shaw)
Gift tax, not capital gains. Can range from 18% to 40% on the amount/value over $17k . . . but what the discussion is missing here is that it is normally the giver (not the recipient) that pays the tax.
Agree (not that I'm a tax attorney), but in the case of property, if you eventually sell what you were given, receiver will pay capital gains if you 'gain' over $250k.
Excuse my ignorance but how does gift tax come into play here ?
Meaning are saying people can just gift athletes money and then the athletes pay no taxes ?
Maybe I should re read this thread cause that can’t be what you’re suggesting .
Exactly this. And that’s not missing. See the 2nd post in this discussion:
Kids would rather have the cash or some cool ass $hit like a truck. Co-eds aren’t impressed with a sensible Tudor style ranch in an upper middle class neighborhood.
If I gift someone (athlete or not) $$ in a sum greater than $17k (in 2023), then I (not the recipient of my gift) am liable for gift tax. How do I know this? Trying to fund my kid’s 529 w/o a tax consequence.
[@Agoodnap — still hoping I’m not a parent and never have kids because I’m so irresponsible? 🖕]
Hey, thanks Spoon-man, now that you posted that paragraph, I see you are right — you had already stated that it is the giver and not the recipient who owes the gift tax. My bad for being redundant! You da man!
Good for you . On the 529 .
Yea you can multiply that number by 2 if you’re married. I’ve been gifting my kids money for years , time to cut them off but hey they get it when I’m dead too.
I suppose you could gift an athlete money but I don’t think the ncaa would approve. Which is why I was saying it doesn’t really apply . I thought the discussion was primarily focused on paying these college athletes .
the giver of a gift is not taxed. The gift could be construed as taxable income For the recipient. The major tax consequences of gifting greater than 15000 is that your estate value is reduced so that one cannot avoid estate taxes.
Nice, no source cited or context explained. Try these:
https://www.irs.gov/businesses/small-businesses-self-employed/gift-tax
https://www.irs.gov/businesses/smal...oyed/frequently-asked-questions-on-gift-taxes
This one from TurboTax includes discussion of a $12-mil lifetime exclusion limit, which I had not heard of previously:
https://turbotax.intuit.com/tax-tips/estates/the-gift-tax-made-simple/amp/L5tGWVC8N
Both the IRS and TurboTax sources note that it is the giver, not the receiver, that is responsible for tax considerations (e.g., filing Form 709 and/or paying the applicable gift tax).
Per questions posed earlier in this thread, The IRS Gift Tax FAQ page has a Q&A on how to treat the sale of property that is gifted to you:
The general rule is that your basis in the property is the same as the basis of the donor. For example, if you were given stock that the donor had purchased for $10 per share (and that was his/her basis), and you later sold it for $100 per share, you would pay income tax on a gain of $90 per share.
But the “gift tax” in that scenario applies to the donor, in the year the property was gifted to you. You are on the hook for income tax on the gift only if and when you then transfer the property for monetary gain, using the initial value of the property at the time you received it as your basis.
I agree. The gift tax only kicks in when one has gifted over the lifetime exclusion which currently is 12 mill. The purpose of that is to prevent avoiding inheritance taxes by gifting away millions(over 12 mill) until your estate has no value. Gifts over 17000 lower the 12mill exclusion from your estate. Your tax is covered from the estate tax. If your estate is worth much less than 12 mill, you do not pay tax on your gifts unless the gifts exceed your estate value.
I gift my kids every year in increments of 15 thou. If married then double that. You can then give that gift amount to multiple people in same family and still keep under the gift limit.
The federal form you fill out is for gifts that go over the the 17 thou limit to any one person. That amount then lowers your 12 mill exclusion on your estate. The purpose of this is to prevent very large estates from gifting away the value to then not pay estate tax upon death.
Just looked values up for 2023. The gift exclusion is 17 thou this year. The estate exclusion is 12.9 million.
thus: all you fans can gift 16000 to any one recruit with no issues for yourself. The IRS could conclude that these gifts are income for that person, not a gift.
Yeppers, I agree on the purpose of the rule. The other trigger for having to file the form is if you “split” a gift in excess of the individual $17k exclusion limit w/ your spouse (and each partner has to file their own form declaring the split).
NIL deals are considered transactional, not gifts, so the gift tax considerations don't come into play. The IRS considers them taxable income, not gifts, which are normally exempt from income tax for the recipient. So whether it's cash, a car, or a house, that's income that has to be reported. Spooner is correct that a house would be a big chunk of income on which to pay taxes, and without other liquid assets in the deal, it could be pretty hard to cover that tax bill.
I’ve never seen a single person hit their lifetime gift tax exclusion that would cause gifts to be taxed.
Well it’s not exactly a common occurrence which I think is the point you’re trying to make .
But it’s more common in the last few years than in the past . The current lifetime limit reverts back to the old levels if Congress doesn’t act on it before 2025 when it’s set to expire and the wealthy folks are taking advantage of it.
it’s also not the kind of thing people generally tell you either lol
Are you taking auditions for adoption??
Try not to be such a cheapskate and bump it up to $18k in 2024 before the 2025 expiration of the JTCA. 😉
This. I didn't know why people were talking about gifts so thanks for making such an easy-to-understand post. This is income, boys and girls. It's like winning a car on a game show. Gotta pay income tax on it.
Don't know the exact details, but I know a lawyer that messed up the transfer of farmland into a llc and botched the stepped up basis.. so now the LLC is still on the hook for farm land at 1980s values instead of 2017ish values... Its unlikely it gets sold in the next generation or two, but it would be a several million dollar difference potentially.
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