Gift

g-creek — Tue, 24 Feb 2026 04:59:55 GMT

Friends A and B decide to buy and flip a house in 2020. As work begins, Friend A asks Friend C if she would be interested in helping with the design. Friend C is not a professional but is told by Friend A that if they make profit, he will give her some undetermined amount. Due to unforseen conditions and Friend B not helping with labor, the project stretches into 2022. Due to extra costs, it is assumed they probably will not make a profit, but actually lose money. Fortunately house prices are still high and the house sells and a profit is made. There is no written or oral contract between any of the parties and Friend C has not submitted an invoice for her efforts. Friend A is happy and relieved to finally have the project completed and gives Friend C a check for $30,000. Is the $30k a business expense for Friend A and business income for Friend C, or a gift from Friend A to Friend C?

Re: Gift

xmasbaby0 — Sat, 15 Apr 2023 01:25:37 GMT

Friends A, B and C ought to consult an attorney to sort out what is more of a legal issue than an income tax issue. This user forum is not the place to help sort out those kinds of issues.

Re: Gift

AmeliesUncle — Sat, 15 Apr 2023 19:12:31 GMT

At first glance, it seems that C is also part of the Partnership. Her pay was dependent on the profit/loss, which seems like she it being treated as a Partner.

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Gift

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Re: Gift