My wife is in the process of buying a new car, her father has stated that he would like to "be the bank", but really wants to gift her as much as he can, he would like to just write a check for the car but i dont think he can, the gift threshold is 14K for 2014 is it not? So the question becomes this: Can he give her 14k, give me 14k and then in turn can i give her 14K. Would it make a difference if he gave her 14k, I gave her 14k and then he gave me 14k?
aside from that could he give her 14k, then loan her the remaining amount( with a written contract), which he could then forgive at the start of next year.
Your father-in-law can gift $14,000 to both your wife and to you. Unless you and your wife keep your finances separate, there'd be no second-step need for you to then gift your $14,000 to your wife. The $14,000 gift tax exclusion doesn't apply between spouses who are US citizens.
If your wife's car will cost over $28,000, then the "forgivable loan" concept is also legal and can be used with a multi-year gifting strategy. But in such a case, your father-in-law will need to charge the IRS prescribed interest rate (Applicable Federal Rate) on the promissory note or the interest he would've received will be considered imputed income.
Hope that helps. All the best.
Hi Brandon! You are on the right track in thinking of alternatives. Her father can gift her $14K and can separately gift another $14K to you for a total of $28K. As a gift you can use the money any way you like, so you could use it for a car. If her dad is married, his wife can also separately give each of you $14K for an additional $28K.
As an alternative, he could provide an intra-family loan and forgive principle next year. You will want to be careful to have the contract in writing and be sure that he is charging appropriate amount of interest per the IRS guidelines. I always recommend caution when dealing with family dynamics and loans, but if you are comfortable with this arrangement, then it is a definite possibility.
These gifts or loans should have little or no tax impact on you, but always check with your tax advisor. Your wife's father definitely needs to verify the plan with a tax and/or legal advisor on how these strategies relate to his lifetime maximum gifting and his estate management.