From:  Barb and Tom
Date:  Fri, 08 Dec 2006

Mom has a $150,000 CD maturing soon and she wanted to put my name on the new CD as a co-owner, with the earnings being reported under her social security number and tax return. Would $75,000 be a taxable gift? If either of us died, would only one-half be included in the decedent's estate?

Answer

Date:  Fri, 29 Dec 2006

Hello Barb and Tom,

I don't think your mother should make you the joint owner of the account.

$75,000 would be a taxable gift. You would be taxable on one- half of the interest, even though it's reported under your mother's social security number.

All of the account could be included in your mother's taxable estate, and one-half would be included in yours.

As an alternative, your mother should consider having the account set up as a "totten trust" account, under her social security number. You would automatically inherit the account at her death, and the interest income would be taxable to her.

Good luck!
Mike Gray

For answers to new questions, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight by filling out the form below.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.