patrick.net

jdsko30 says

but to help us get into a home.

lucky you, you have a good mother in law.

So if she's not interested in profiting from the house then why is this considered an investment?

edvard2 says

So if she's not interested in profiting from the house then why is this considered an investment?

It's a cultural thing and it makes a lot of sense.

In my opinion, it's pretty pointless to leave behind money when you're dead. Afterall, if I die at 80, my kids will be around 50. They have no need for money then.

If my kids need the money at 25-30 after they married and need a stable place, I'll do the same thing, liquidate my equity and give them the money then when they need it most, now, not when they are old as well. The demand for money is most intense during early family building year so why have my kids wait 5 years to save enough $$ to buy a house when I can just do it now and save the agony. My money is theirs anyway.

Don't be mistaken, the japenese mother-in-law intends to never ask for the money back.

It appears that you should be fine. i.e. As the receiver of the Gift you pay no tax. You would have to file IRS form 3520 though for the amount of the gift/cash received.

http://taxipay.blogspot.com/2008/03/us-gift-tax.html

As long as mom stays in Japan and is not a US citizen, and uses a non-US affiliated bank, stagger it over 2 years, (and don't do it in cash, use check or bank wire transfer)
http://www.justanswer.com/tax/01e5d-international-money-gift-tax-question.html In theory you can do it all in one year, but IMHO I'd rather not have to file form 3520. But she might be liable for gift taxes by Japan.

Either that or there is the manual method where you and your wife make a few trips to visit her, then stagger your returns (you come back a day earlier or something) and each of you can carry $9999 cash back into the US without reporting it at all.

FlashGordon says

Either that or there is the manual method where you and your wife make a few trips to visit her, then stagger your returns (you come back a day earlier or something) and each of you can carry $9999 cash back into the US without reporting it at all.

You realize that still violates the law, right? Structuring a transaction in this way can still violate the law. Furthermore, if you had $9999 at customs, you probably would still have to answer uncomfortable questions because it looks like you're doing something wrong. Don't recommend this.

kunal says

As the receiver of the Gift you pay no tax. You would have to file IRS form 3520 though for the amount of the gift/cash received.

Yes, you need to file this. I would not recommend FlashGordon's advice of not filing it. The money could be flagged since it's from a foreign source, and you could have bigger problems.

Also, if you put your MIL on the title later, it could be a gift from you/your wife to the MIL. I'm also not certain that adding your MIL to the title later won't trigger the tax obligations of having property here -- again, it could be seen as part of the same scheme and a tax evasion tactic.

I recommend talking to an accountant or lawyer about this if you're trying to avoid some sort of tax or if your MIL is. The advice you get here is worth what you paid for it.

I think the crux of his question was how to get the money in with the fewest questions asked and fewest tax implications.

We take money back and forth through customs all the time and they are free to ask about it (which rarely happens but has on occasion and the questions aren't 'difficult') but as long as its less than $10,000 per party you simply do not have to declare it (that's the law as written).

Same with filing the 3520, law clearly states it's required for $100,000 or more. So if you do $99,990 per year, you don't have to file the form. Although with this method its kind of a moot point since the bank is obligated to report any transactions over a certain value (something like a couple thousand)

Seems like I shouldn't have to say it here of all places, but following the governments own rules isn't illegal.

Thank you all for your feedback.

If she is making a gift to her daughter and son-in-law, it's called a gift.
Why doesn't she write you a check for $200K?
OR
Why doesn't she writer her daugher a check for $200K?
$200K in Vanguard High Yield Corporate Bond Fund=$14,000 year interest wired into your checking account, FYI.
Have your cake and eat it too?

Does your wife have a sister?

clambo says

Does your wife have a sister?

=)

FlashGordon says

Seems like I shouldn't have to say it here of all places, but following the governments own rules isn't illegal.

Right, but structuring a transaction to avoid the reporting rules is still illegal. If it can be seen as one transaction, multiple $9,999 transfers within a few days by two people, as you suggested, would violate the rules.

clambo says

If she is making a gift to her daughter and son-in-law, it's called a gift.
Why doesn't she write you a check for $200K?

Any deposit of 10k of more would generate a form by the bank informing the IRS of the transaction. Any "Gift" of 10k or more is taxable. So in theory you would have to pay taxes on the other 190k. You taking a chance on weather the IRS catches that you didn't claim the 190k in your tax return. They may miss it, or the may catch it at a later date after you spent the money. Taxes, penalties and late fees would really add up. And of course there's always jail, but the rarely do that so long as they get there money.

If it was me, I'd have her to send over a few thousand dollars at a time and cash those checks one at a time. Some people think they can get $9,999 at a time and get away with it, but often if a bank notices a pattern (and it could be as little as $5,000 at a time) they will file a form with the IRS anyway. After all they are not Stupid, there terrorists about, they are told to look for suspicious banking activity. The banks hand's are not tied by law if the amount is under 10k, if they are suspicious they could file a form for a 99 cent deposit.