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Jul 2, 2020
4:58:12pm
msbbm760 Walk-on
It's not a gift when the only reason it is being given is because a service was
provided but the other party. If no investment management was provided, then no gift would have been given. So for tax purposes it is a tip and taxable income to the recipient. If they did not have this alternative business relationship, then they could give a gift. Transactions like this are regularly reclassified by the IRS. They may get away with it but those are pretty big numbers to escape notice if they are audited. It's a risky position to take that would not hold up to any scrutiny. That would require tax payments, interest, and penalties on the tax side. There could then be a host of security law issues. And some lives could be made miserable for quite some time. I'd strongly advise against it if they were my client.
msbbm760
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The Accounting Barro
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msbbm760
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