Money Received from Step Mom

Forum|Forum|7 years ago
August 1, 2019
2 replies
30 views

I have a somewhat unique situation – I agreed to manage my step-mom’s money (trading stocks etc) of which I am the sole beneficiary and she decided to give me about $10K of the profits. In this situation, even though it’s under the $15K gift limit, would this be considered income that I have to report given it’s tied to me investing well on her behalf? I’d manage the money regardless out of self-interest given I’ll eventually get the money… also, If I do have to report it as income, would she have to report me as some type of employee?? I was reading about the “nanny tax” and it’s all very confusing…. Thank you for any guidance!

Anonymous_

Level 15

@savingdave99 wrote:
.....she decided to give me about $10K of the profits....

You will have to make the call in this situation, but it certainly appears to be a gift; she was under no obligation to compensate you in any amount and in any event but did so after the fact.

The Tax Court stated as follows in one case: “If a payment proceeds primarily from the incentive of anticipated benefit to the payor beyond the satisfaction which flows from the performance of a generous act, it is not a contribution or gift.”

TomD8

Alumni - Champ

I agree that it's a gift, since there was no prior agreement that you would be paid anything, and she decided to reward you after the fact. Gifts are not reportable as income by the recipient (nor are they deductible by the donor).

**Answers are correct to the best of my ability but do not constitute tax or legal advice.