Your parents may need to file a gift tax return, but no tax will be owed. Each person can gift while alive plus leave in an estate, a combined total of about $5 million tax free, over that there are estate taxes. If a person gives more than $14,000 to one person in one year, then a gift tax return must be filed. While no tax is owed unless the person has given away more than $5 million in their lifetime, the IRS uses the gift tax return to subtract the gifts from their lifetime limit.
A gift tax return does not have to be filed if the gift is less than $14,000 per person per year, and if you have a spouse and 2 kids, or three kids, then your parents could say that each parent (mom and dad) gave $14,000 of equity to each of 4 different people (you, spouse and children) so that even though the total gift was $100K, each individual gift was less than the $14,000 limit so no gift tax return is due. I'm not sure whether "giving" equity to your kids is a good idea -- it's mostly a legal fiction, but it might have consequences, and I am not an attorney or accountant. Unless your parents are planning to leave a $5 million plus estate when they die, it might be simpler to do the gift tax return. Turbotax does not do this form, but its fairly simple, they can download and complete it themselves. (If they ARE planning on leaving a $5 million plus estate, they should already have a tax planner, who can help them with reporting the gift.)
See here for more, <a rel="nofollow" target="_blank" href="
https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Frequently-Asked-Questions-on-Gift-T...>
